Grupo SURA’s international rating was affected by the social and political demonstrations in Colombia, as in many other firms. Fitch Ratings revised Grupo SURA’s international rating to “BB+”, while other agencies such as Moody’s maintained a “Baa1” for SURA Asset Management. S&P kept the “AAA” local rating for its insurance firm (Suramericana). Even though Grupo SURA’s rating was revised, this quarter reported strong results as usual.
First of all, it is important to note the significant improvement in consolidated income. Consolidated net income for the first two quarter of the year amounted to 672,273 million Colombian Pesos (COP), while in the second quarter alone, it reached COP 461,185 million. The improvement in the first two quarters of the year can be summed up in a 174.1% growth and a 43.6% for the second quarter respectively. The growth is explained by the faster-than-expected recovery of the Group’s different businesses, especially SURA Asset Management. SURA not only improved its operating revenues, yielding a higher net income, but had firm control over operating expenses.
Total revenues reached COP 11.7 trillion, an increase of 14.6% compared to the same period last year, mainly driven by positive levels of business performance. Written premiums recorded a growth of 10.2% while fee and commission income went up by 16.0%. In the same way, the progress in revenues obtained via equity method was explained primarily by higher net income figures by Bancolombia, Grupo Argos, and Protección.
The second quarter showed growth compared to 2Q20. Revenues leaped 15.5% due to an improvement of 13.2% in premiums, 23.0% in fees and commissions, and 602.3% in revenues obtained via the equity method. Investment income decreased 53.6% because of the accelerated recovery experienced by financial markets in 2Q20.
Total revenues experienced an important boost, whereas total cost and expenses did not. Total cost and expenses increased 13.2% for the accumulated 6M and quarterly by 20.4%, both in comparison to the same periods last year. This is attributable to the continued impact of the pandemic on Suramericana, including COVID- related costs and expenses reaching COP 1.1 trillion on a Year-To-Date basis and COP 686,216 million for the quarter. Nevertheless, operating expenses only grew 0.1% for the year and 0.7% for the quarter as a result of the continuous efforts to improve efficiency among Grupo SURA’s business, as well as a firm control over costs.
Operating earnings amounted to COP 1.2 trillion at the end of the first half of the year, increasing by 29.3% compared to the previous year. The advance in revenues and spending efficiencies reflects the current situation of the Group; Grupo SURA has partially mitigated the costs and expenses incurred in the pandemic.
The second quarter of 2021 recorded a significant decrease in Grupo SURA’s liabilities due to the payment of USD 300 million on its international bond that matured back in May. The reduction in its liabilities was about COP 844,575 million. As a holding, Grupo SURA’s net debt stood at COP 4.4 trillion at the end of the second quarter. Sticking with the Groups’ debt reduction plan, Sura Asset Management made important repayments of COP 320,000 million during the first half of the year.
It is worthwhile to remember that in March 2020, Grupo SURA authorized the buy-back of shares to keep its share structure. In the second quarter of 2021, the Group continued executing the share buy-back program, reaching a total of COP 30,081 million. The current structure is comprised of 86% of common shares and 14% of preferred shares. Aside from the structure, the group’s plan will benefit both the firm and the shareholders.
Not long after the end of the first half of the year, Grupo SURA carried out the first divestment of the SURA Ventures portfolio, corresponding to Clover Health. The investment was made in 2017 for USD 3.7mm, which generated an annual return of 25.9% in Colombian pesos, translating into a return of 2.6x the capital invested in Colombian pesos.
Regarding its share performance, GRUPOSURA ordinary shares closed at COP 18,500 at the end of June, declining 14.7% in comparison to the previous quarter and 0.8 % year-over-year. Likewise, PFGRUPSURA preferred share closed at COP 16.520 at the end of the second quarter of 2021, decreasing by 12.8% compared to 1Q21 where it experienced an increase of 4.0% year-over-year basis. The second quarter registered 15,559 new shareholders, of which 13,632 are private individuals.
