Q1 2026 earnings call transcript

FINAL TRANSCRIPT

Sagicor Financial Company Ltd.

First Quarter 2026 Earnings Conference Call

May 15, 2026 — 10:00 a.m. E.T.

CORPORATE PARTICIPANTS

Andre Mousseau

Sagicor Financial Company Ltd. — President & Chief Executive Officer

Kathy Jenkins

Sagicor Financial Company Ltd. — Chief Financial Officer

George Sipsis

Sagicor Financial Company Ltd. — Executive Vice President, Corporate Development & Capital

Markets

CONFERENCE CALL PARTICIPANTS

Gabriel Dechaine

National Bank Financial — Analyst

Mike Rizvanovic

Scotiabank — Analyst

Darko Mihelic

RBC Capital Markets — Analyst

Trevor Reynolds

Acumen Capital Partners — Analyst

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PRESENTATION

Operator

Good morning. My name is Ynnah and I will be your conference operator today. At this time, I would like to welcome everyone to Sagicor Financial Company’s First Quarter 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star then the number two. Thank you.

Mr. George Sipsis, EVP, Corporate Development and Capital Markets, you may begin your conference.

George Sipsis — Executive Vice President, Corporate Development & Capital Markets, Sagicor Financial

Company Ltd.

Great. Thank you, operator, and hello, everyone. Thank you for joining us today to discuss

Sagicor’s first quarter 2026 results. Our disclosures are available on our Investor Relations website at investors.sagicor.com, which include a press release, financial statements, MD&A, and the supplemental information package containing core earnings, drivers of earnings, and additional disclosures. The link to our live webcast is also available on our website. This conference call is open to the financial community, investors, the media, and the public with the reminder that the Q&A period is reserved for financial research analysts.

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I will begin by referring you to the cautionary language and disclaimers in our materials and public filings regarding the use of forward-looking statements and the use of non-IFRS financial measures and ratios which may be mentioned as part of our remarks today. I would also like to remind the audience that actual results regarding forward-looking information could differ materially and please note that a detailed discussion of Sagicor’s risk factors is provided in our MD&A, which is available on

SEDAR+ and on our website. A discussion of the assumptions underlying our expectations is provided in our filings and earnings releases.

Unless otherwise noted, all dollar amounts referenced will be in US dollars, consistent with our reporting practice.

Joining me today is our President and CEO, Andre Mousseau; our Chief Financial Officer, Kathy

Jenkins; and Anthony Chandler, our Chief Controller. We’ll begin with prepared remarks by Andre and

Kathy, followed by a Q&A session.

With that, I’ll pass the call on to our President and CEO, Andre Mousseau.

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

Thank you, George. Good morning, everybody. Thank you for joining us to talk about our Q1 financials. I’d also like to acknowledge and thank our shareholders who joined us earlier this week in

Barbados for our annual general meeting.

This is a bit of an unusual quarter, because while so many of our strategic initiatives are trending in a very positive direction, in Q1, for the first time really in a couple of years, our core earnings were

4 measurably softer than the core run rate of our business. Our core earnings to shareholders of $25 million included $8 million of negative core insurance experience, substantially all of which was due to mortality in our North American segments, which we often observe in our first quarter. However, unlike last year, where this was mitigated by insurance gains elsewhere in our system, this time it brought our core earnings below our best estimate of our run rate. Absent that mortality, we estimate that we would have hit a core ROE of approximately 13%.

We also observed some adverse mark-to-market movements across all of our segments as asset prices broadly declined globally in Q1 and, as we’re net long assets, that effect is more than the revaluation of our liabilities. The majority of these negative marks are fixed income instruments which continue to perform on a fundamental basis, meaning a dollar of foregone income in this quarter will mean a dollar of more income in later periods. In addition, we took some charges in the Caribbean as we settle open issues and drive forward on our integration plans as we look to give our new public holding company, that’ll hold all of our Caribbean assets, the best start that it can have in 2027.

Let’s have Kathy give a detailed financial review of Q1 and then we can come back to me. Kathy?

Kathy Jenkins — Chief Financial Officer, Sagicor Financial Company Ltd.

Thank you, Andre, and good morning, everyone.

As Andre mentioned, Sagicor’s first quarter 2026 core earnings to shareholders were $25 million.

The Company’s operating segments generated steady new business production, leading to solid new business CSM of $37 million. Core ROE was 9.9%. When adjusted for core insurance experience losses,

5 core ROE would have been approximately 13%, consistent with management’s expectations. Reported net loss in Q1 was adversely affected by $49 million of market experience losses related to lower asset prices in the U.S. and Canadian fixed income and equity markets. This was partially offset by the mitigating impact of liability revaluation. Q1 was also affected by certain one-time charges related to our

Sagicor Life segment as we prepare to merge our Caribbean subsidiaries.

Now I’ll give you some more details on the segment financials. Sagicor Canada’s core earnings to shareholders of $23 million for the quarter decreased 9% year-over-year driven by insurance experience losses from higher-than-expected mortality. Net loss to shareholders of $1 million for the quarter was lower than core earnings to shareholders due to unfavourable market-related impacts from higher interest rates and negative equity returns. New business CSM generated $10 million in the quarter but net CSM decreased 2% quarter-over-quarter in U.S. dollars to $557 million due to a devaluation of the

Canadian dollar.

Sagicor Life USA’s new business production of $298 million was another solid quarter of production and in line with management expectations. Core earnings to shareholders for the quarter of

$5 million decreased year-over-year and were impacted by adverse mortality experience, similar to what we saw in Canada. Also, like our Canadian segment, net loss to shareholders of $7 million for the quarter was lower than core earnings to shareholders due to adverse market experience from higher interest rates, partially offset by favourable changes in actuarial assumptions. Net CSM increased 5% quarter- over-quarter to $158 million.

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Sagicor Jamaica achieved robust insurance sales resulting in 7% net premium growth year-over- year. Sagicor’s share of Sagicor Jamaica’s core earnings to shareholders of $10 million for the quarter was unchanged year-over-year due to improved core net investment results from growth in loan and investment portfolios, offset by a modest amount of residual Hurricane Melissa related experience recognized in the quarter. Sagicor’s share of Sagicor Jamaica’s net income to shareholders of $6 million for the quarter was lower than core earnings to shareholders due to timing differences between the payment and recognition of asset tax throughout the year. Net CSM increased 2% to $298 million, driven by strong new business production.

Sagicor Life’s core earnings to shareholders of $10 million for the quarter decreased 7% year- over-year as a result of favourable mortality experience in Q1 2025 that did not repeat this quarter. Net loss to shareholders of $11 million for the quarter was lower than core earnings to shareholders due to unfavourable mark-to-market impacts from interest rate movements and non-recurring reinsurance- related costs. Net CSM was $268 million, an increase of 2% quarter-over-quarter, driven by new business CSM of $8 million.

At our head office, other operating companies, and adjustments segment, core costs to shareholders were $22 million for Q1, consistent with the prior quarter. Net costs to shareholders were also $22 million for Q1.

Even having been through the noticeable asset price devaluations in the quarter, Sagicor remained well capitalized in Q1. The group LICAT ratio was 134% and our financial leverage ratio was

27.5%. Our book value per share was US$7.18 or C$10.01. Our deployable capital, or shareholders’

7 equity plus net CSM to shareholders, was $2.1 billion or US$15.47 per share or C$21.57 per share. We are also pleased to announce our 26th consecutive quarterly dividend to shareholders since we’ve been listed on the Toronto Stock Exchange and second dividend at the higher level of US$0.075 per quarter or

$0.30 annualized.

On that note, I will hand back to Andre to close our prepared remarks.

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

Thank you, Kathy.

I’m excited to talk about our strategic initiatives, but just to put a fine point on the financials piece, you know, just as we had asked our investors not to annualize the $46 million of core net income that we delivered in Q2 last year to a 17% or 18% ROE run rate, we would advise against annualizing this quarter’s $25 million figure. We believe our true ROE run rate today is approximately 13% and that, really, there’s little long-term information value in the quarterly oscillation around that figure. Similarly, while we did have adverse market mortality in the quarter, our best estimate is that, if Q2 closed today, the market volatility would be mildly positive in our favour.

We do continue to make excellent progress on our strategic initiatives to drive our return on equity expansion into 2027 and beyond. You did see in April, we were very pleased to announce the hiring of Eric Sandberg as president of our U.S. subsidiary, which was an addition that we’ve been hinting at for a while. Eric joined us from National Life where he was the CFO and Chief Risk Officer.

National Life is a $60-plus billion U.S. insurer and a top 10 annuity provider in the market, and so Eric

8 brings to us a lot of that expertise and discipline and he’s going to be laser-focused in helping to drive our U.S. team to even faster growth than we’ve exhibited over the last five years. With the addition of

Eric, our conviction on our U.S. growth opportunity is as high as it’s been since we launched our annuity strategy five or so years ago.

In the Caribbean, we’re also making excellent progress, in this case towards merging our

Caribbean businesses. While we believe that the transaction will close towards the end of the year due to all the approvals involved, we’re hard at work now to reengineer our business processes, upgrade our technology stack, focus our vendor relationships, and redesign our entire organizational structure in anticipation of closing. When completed, we will have radically transformed our businesses across the

Caribbean, resulting in a better customer experience which will solidify our competitive position, an improved employee experience, and significant margin enhancements. We do intend to incur some further costs in 2026 in anticipation of this merger and all of these will be in service of a higher ROE going forward. So, all of this gives us strong conviction on our growth prospects and the path ahead, which enables us to reiterate our 2027 and 2028 targets for 14% and 15% core returns on shareholders’ equity, respectively.

With that, operator, we are ready to open the lines for any questions.

Q & A

Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your telephone keypad. And should you

9 wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question.

Thank you. Your first question comes from the line of Gabriel Dechaine from National Bank.

Please go ahead.

Gabriel Dechaine — Analyst, National Bank Financial

Good morning. I’ve got a couple of questions. So firstly, on the mortality experience in Canada, you’re obviously flagging that. We’re, what, a month and a half into Q2. Have you seen any normalization of that trend or improvement suggesting that what we saw in Q1 is idiosyncratic?

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

Thanks, Gabe. We don’t get our information quite as real time as that on mortality as they roll in.

There tends to be a lag of several weeks. So it’d be too early to have a view on that. As we have looked, particularly at the Canadian business, we’ve only owned it for two years, in each of the prior two years we had negative mortality in Q1. In 2024 it actually came back and was quite positive in Q2 while in

2025 Q2 was negative again. We still think that we’re appropriately reserved, but just due to the size of the book, there’s going to be some oscillation around that.

Gabriel Dechaine — Analyst, National Bank Financial

And what segment would that have been in? Like some more small number of high net worth or more broad-based type cases?

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Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

It’s pretty broad based. Our book is a large number of names, relatively smaller exposure, and we significantly reinsure it on a names basis.

Gabriel Dechaine — Analyst, National Bank Financial

Got it. Switching over to the U.S., it sounded like it was also mortality, but I was reading the release, and it sounded more like it was described as seasonal factors. I’m just wondering what was meant by that, just for clarification.

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

Seasonal also means mortality in the U.S. sense, and so, just due—

Gabriel Dechaine — Analyst, National Bank Financial

Flu season type thing?

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

Yes, indeed. And this is something that is described and hotly debated among the insurance community. A lot of the primaries reinsure a lot of the mortality risk, so if you want to read about this, you can go to the reinsurers’ disclosure. RGA, for example, does talk about this effect.

With the U.S., again, it is the third year in a row where we’ve had negative mortality in Q1. In two of the three years we were quite positive in Q2 in the U.S., so in 2023 and 2025 we had very positive

11 emergence, and in 2024, which was backwards of what I just told you from ivari, the negative piece persisted into Q2. So again, these are big numbers relative to our quarterly income statement, but if you look at the overall liability profile we think we’re properly reserved and we just see this as noise.

Gabriel Dechaine — Analyst, National Bank Financial

Is there any way you can maybe address that in a line item sense that, you know, your experiences, you have some patterns there, so maybe it goes through the expected insurance earnings and then we have some sort of a seasonal expectation where Q1 is the low watermark typically for the year and it ramps up from there on out as opposed to going through an experience—

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

As a non-actuary, you’d love to do that, because if you looked at other principles, if you have one-time items, you take it and you amortize it over the period. What we’ve been told is that the pretty black-and-white principle of IFRS 17 is that when you have insurance experience outside of market experience, when you have insurance experience, you take it now and you don’t get to amortize it. So, if you go back and you look at the supplement and look at our insurance experience, you’ll see that three years in a row Q1, going back to 2023, three years in a row Q1 was the lowest quarter.

Gabriel Dechaine — Analyst, National Bank Financial

Okay. Last one, just on expenses. On the last call I believe you were talking about this year being more of an investment year to ultimately get you to that mid-teens ROE target. Did we see any of that this quarter? Does that go through your insurance earnings? Or there’s the other OpEx, which was $112

12 million, but that’s not really a core number I don’t think. So, I don’t know what the answer is to my own question, which is why I’m asking you.

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

Right. No, no. Most of what we are referring to there, we believe is going to run through non- core. Not all of it will. So, if you think about investments that we’re making to build, we’ve just brought on a new executive to run our U.S. business, and so that’s a definable cost that we’ll start seeing running through core in the U.S. business. But if you look at the one-time reinsurance costs, which were non- core, for example, we had a small recapture of a piece of business that we moved to another reinsurer, which is net income accretive going forward but you incur a bit of a cost upfront. There was another long-standing issue out there with a reinsurer where we added disagreement and we’ve taken a provision on what we believe will be the ultimate settlement, again, in an attempt to have that balance sheet be clean and pristine for 2027. And so that’s what you saw in Q1.

Going forward throughout the year, as I said in my remarks, we’re not waiting, in particular, on the Caribbean to do all of our restructuring work in terms of bringing the companies together. It’s an unusual situation because, ultimately, we control both companies, even if the ownership is disproportional, so we’re able to get going on merger integration earlier than what would be usual. And so usually when you would merge or buy an entity, you stuff the integration costs into the same quarter as closing, whereas if we start moving, continue to move ahead of that, we may take through non-core some additional costs in 2026 that normally you would run through as just part of merging a business.

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Gabriel Dechaine — Analyst, National Bank Financial

Okay. All right. Well, thanks, and I look forward to the next catch up.

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

Thank you.

Operator

Thank you. And your next question comes from the line of Mike Rizvanovic from Scotiabank.

Please go ahead.

Mike Rizvanovic — Analyst, Scotiabank

Good morning. Just sticking to the mortality, just wondering, how would you characterize the magnitude this quarter? I’m just trying to get a sense of is this as bad as it can get in terms of a single quarter of negative mortality experience. And then, secondly, is there any way to minimize these types of quarters in future periods?

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

If you look back at Q1 2024, the mortality piece was, the dispersion was different, but it was quite similar in North America and it actually had, looking at SLI, other negative experience which was more around policyholder behaviour. And so, if you look through at the supplement, Q1 had negative

14 experience in each of the last three years and in one of the years it had gone on to be net positive and the other two it had been, one was negative and one was just slightly negative.

So, all to say that this quarter seems to be at the edge, but not necessarily an outlier in terms of something that you would see once a year. And if you look back again at our supplement, last year in Q2 we had even more of this in terms of positive emergence of $15 million or $16 million. So this is volatility that we do believe is a feature of IFRS 17 as opposed to being a bug in the system. And that applies equally to the market volatility piece. I talked about, in the prepared remarks, that we don’t see much information value around it as long as the investments are money good. It’s just net income moving through time. And we feel very good about our investment portfolio.

With the market volatility, it would be possible to make a choice and basically, by completely taking any sort of market movement out of your assets backing capital, which would mean basically taking your balance sheet in all your segments in your assets backing capital to cash, which would have a couple of point reduction in your expected ROE going forward kind of indefinitely. And similarly, right now, we hedge away half of the equity exposure that we have that’s kind of an output of the asset management piece of our Canadian business and we take a couple of points of reduced ROE just on the basis of that hedge. And so, if you hedge the other half, it would be another couple of points of ROE. So we think that our north star here is to generate the best risk-adjusted returns on equity to our shareholders over a long period of time and we’d rather do so at a mid-teens core ROE and core compounding of value while accepting some of this market volatility than have something in the high single digits that had no market volatility.

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Mike Rizvanovic — Analyst, Scotiabank

Okay. Thanks for that detail. And then maybe just a quick one on the dividend, sorry, on the buybacks. Very minimal this quarter. Any updated thoughts on the buyback? I know it’s not a priority in terms of how you want to deploy capital, but just with the stock trading below book, any thoughts on maybe getting potentially a bit more aggressive on the buybacks?

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

We have, as you pointed out, lightened up on the repurchases just in the last couple of quarters as we have been trying to let the market develop a little bit more liquidity. And you can see the purchases are publicly disclosed and we’ve had a little bit of a magic number around the days where the stock was below $9 per share, which hadn’t happened much in Q1. And so, while we’re conscious of wanting to give the market the opportunity to develop the liquidity, the further we get from book value, the higher the ROE to all the shareholders as we buy it back, and sitting here in our position, we’re allowed, we’re in a position to have quite a bit of conviction around our forward guidance, and so I think you could infer that the further that we get from book value the more we’re going to lean in to buybacks.

Mike Rizvanovic — Analyst, Scotiabank

Okay. Appreciate the colour. Thanks.

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Operator

Thank you. Once again, should you have a question, please press star followed by the one on your telephone keypad. And your next question comes from the line of Darko Mihelic from RBC Capital

Markets. Please go ahead.

Darko Mihelic — Analyst, RBC Capital Markets

Hi. Thank you. Good morning. I have a couple of questions but I just wanted to revisit your answer to Mike’s question on mortality. In your answer you didn’t discuss a couple of things I was hoping you would touch on. The first is your risk appetite around adverse mortality and if that adverse mortality, you know, the sensitivity tables you provide, if this kind of quarter changes that. And then secondarily, you didn’t touch on reinsurance, which is always available. I presume in this market it’s not pricing necessarily very well given the path that you’ve just discussed, but I wonder if you could just touch on if this kind of quarter makes you sort of reassess your appetite for adverse mortality. And then as an addendum to that, obviously, I think your ROE target must at some point and at some level bake into it adverse mortality on a seasonal basis, so… Sorry for that long-winded question, but I just really wanted to revisit it, Andre, in light of how the quarter sort of played out.

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

Right. It’s a good question and this is something that we talked about this week in the boardroom. The short answer is we’re managing this on an annual and a longer-term basis and so this does not change our appetite to assume the level of mortality risk that we have. And that mortality risk

17 has been developed through the risk appetite over the years and we do, you can see in the line items, we do carry quite a bit of reinsurance on our book, and on the Canadian book in particular, because it is a big old book of business that’s been developed with hundreds of thousands of policies.

It’s our view that our net mortality experience is not negative in aggregate, it just happens to be negative in Q1. And so, if we were managing this business to nail annualized targets on a quarterly basis, if that was your north star, you might avail yourself of a little bit more reinsurance and that would cost you with some core earnings. We’re not managing this business on a quarterly basis, we’re managing this for the best long-term return on equity, and we think we are properly reinsured and adequately reserved.

Darko Mihelic — Analyst, RBC Capital Markets

Okay. Thank you for that. And I just wanted to follow up on a couple of other questions, but first, what prompted the change to the discount rate for your liabilities? It’s a bit unusual. We don’t hear that too often. I don’t think the nature of the liabilities change much, often, so if you can just discuss, real quick, why the discount curve changed for your liabilities.

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

The discount curves change every quarter. This is a function of IFRS 17. If you think about the old world of IFRS 4, you would take your asset price movements, which are observable, and then you would almost have a fix or sell through your liabilities to get them to match the asset price movement precisely, which is why you didn’t see this market volatility unless you actually had an asset that went

18 bad. When IFRS 17 decoupled the assets from the liabilities, it removed the explicit fix or sell, but you’re still required to revalue your liabilities using a discount curve every quarter that is informed by the market movement. And so, whereas before it was explicit, you would just have your assets backing capital going up and down, usually through OCI, now you have your assets backing capital going up and down, largely through the income statement, plus you have some tracking error where your actuaries have gone out in the U.S. and calculated the liability curve, in Canada we have one that is prescribed for us every quarter, and that revalues your liabilities as well. But as long as you have a net asset position because you have assets backing capital, you would expect your assets to be more volatile than your liabilities.

Darko Mihelic — Analyst, RBC Capital Markets

Okay. Maybe I misunderstood. I’m aware that liability curves change every quarter. I thought it was, the way you guys had made it sound in your written work, that there was a change in maybe methodology, for example, that would have shifted the curve, but it doesn’t sound like that’s the case.

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

There was one small change, in the U.S. in particular, where the curve is not prescribed, there was one small change in methodology this quarter where we added one of our asset classes that had been excluded before. And so, as we had seen illiquid assets becoming a larger proportion of our portfolio, we said, you know what, even though it’s harder to calculate these because they’re less observable than the public assets, they’re getting to a material portion of the U.S. balance sheet so we should take an estimate on that and put it into the calculation. So we did do that in Q1.

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Darko Mihelic — Analyst, RBC Capital Markets

I see. So it’s like a reference portfolio and it’s got a wider credit spread. Is that the right interpretation?

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

Yes, it is.

Darko Mihelic — Analyst, RBC Capital Markets

Okay. Great. And then, so my last question, Andre, is clearly, volatility hit this quarter. That’s fine.

Should expect some sort of normalization. But the question for me is still, a couple of things sort of still stand out. One is, it does sound competitive in the U.S. with crediting rates and the question is, does that, do you see that also as something that will ease into the future and maybe this year and/or are you contemplating other changes like new products or so on to sort of improve maybe not just production but also profitability? Or am I reading too much into the competitive environment in the U.S.?

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

The competitive environment is robust in the U.S., although I would say we had a pocket in time in Q1 where it appeared less so. A lot of our competitors in the annuity space are affiliated with some of the big private capital pools that have been going through their own private capital indigestion with respect to taking liabilities that allow for redemption. And so, in Q1, there was a pocket of time where rates and spreads went up and the competitive environment did not adjust to that and so the spreads

20 that we earned on our Q1 vintage were actually well above our target. But I’d be cautious. I wouldn’t say that’s necessarily something that’s going to persist. I think if you look through in Q2, as spreads have come in, even as rates have gone up, that has mitigated itself somewhat.

I do think that we want to continue to grow. We’re excited about the opportunity and that was a big part of bringing in dedicated leadership. He comes from a place that was writing three times as much annuities in a given year as we were under a broader product set than ours, which has been particularly focused on the MYGA product, the multi-year guaranteed annuity. So we would expect to drive forward with further product diversification and our goal is to grow that business faster than we’ve grown it over the last four or five years.

Darko Mihelic — Analyst, RBC Capital Markets

Okay. That’s helpful. So, the pathway to the higher ROE is predominantly normalization of mortality from here plus continued growth in the U.S. And roughly how would you characterize that sort of, call it, waterfall of improvement in ROE? Is it like 90% mortality improvement or normalization and just 10% sort of growth in the business? Just give us a rough guideline of how we get back to your typical

13% to plus, I would say, ROE from here.

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

If you asked us for an estimate of Q2, the best estimate would still be in the ZIP Code of that 13% number and that would, over the course of one quarter, be more or less 100% the reversion to the mean on mortality. As we see the ROE growth potential into the mid-teens and pushing through that, it is

21 evenly dispersed between the growth of the U.S. balance sheet, where we think, on a marginal basis, that we are adding assets at a high-teens structured ROE and getting to economies of scale as gross margin grows faster than the SG&A. And so that’s a portion of it. We think there is a meaningful uplift in the ROE of the combined Caribbean business going forward. That is more or less an equal part to it over the next two years or so. And we also think that there is the opportunity, I haven’t talked a lot on this call, but to take some of the thinking that we’ve done on asset allocation in our U.S. business, bring a dollop of that to the Canadian balance sheet, which, because of its size, is quite tweaky, and we think there’s a point or two in aggregate of ROE with that opportunity as well. So, all of those things are not

Q2 issues. This is why we’re focusing on 2027 and 2028 as we tweak up the guidance beyond what our current best estimate is, which is around that 13% number.

Darko Mihelic — Analyst, RBC Capital Markets

Great. That’s very helpful. Thank you, Andre. Have a great long weekend.

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

All right. Thank you. You too.

Operator

Thank you. And your last question comes from the line of Trevor Reynolds from Acumen. Please go ahead.

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Trevor Reynolds — Analyst, Acumen Capital Partners

Hey, guys. I think you’ve touched on it quite a bit, but in terms of forecasting for future Q1s and the mortality that we’ve seen in Q1 for the last three years, is it not safe to be assuming that we’ll see this kind of every Q1 and potentially the offset in Q2?

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

I think it would be, Trevor. So, if I was doing a quarterly forecast model, and I do focus myself internally on the annual numbers, but if I was putting together a forecast model for this company on a quarterly basis, I’d figure out what I wanted to do for the annual ROE and then I would notch it down by some number for Q1. And I would actually notch each of Q2, Q3, and Q4 up proportionately and say, you know, the one thing we can observe with significance is that Q1 is the negative outlier, but then I would notch the other ones up.

Trevor Reynolds — Analyst, Acumen Capital Partners

Yeah. Okay. That’s fair. And then in terms of, I think you mentioned it in your pre-remarks, but kind of where the market sits today in terms of the mark-to-market, it’s probably safe to assume that we see a big bounce back in terms of that in Q2 given where things sit today.

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

Yeah. I mean it’s quite easy to observe where things sit today. The equity piece of the volatility, right? And so I think the equity volatility was $10 million-ish of negative in Q1 and equity levels are

23 higher now than they were at the end of December and so we’d expect that to, if it closed today, to reverse and more. But obviously, that’s subject to the whims of all the geopolitical and all that.

Fixed income is a little tougher, because you can observe data points. Broadly, you would say fixed income maybe is flat to negative-ish, although our investments people might tell you something a little bit different based on some of our names. But if you asked for an estimate today, I would say that the positive piece from the equity would overwhelm the flatness to very slight negativity of fixed income.

Trevor Reynolds — Analyst, Acumen Capital Partners

Great. And then just lastly, on the lingering impacts from Hurricane Melissa, do you think that’s pretty much worked its way through? And I know you mentioned previously like probably about a $5 million overall impact net of reinsurance. Is that still kind of the right range?

Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

Yeah. As we’re taking a running tally, the provision, and Kathy, if you’re on, I think the provision to us this quarter was about $1.5 million, $1 million to $1.5 million, and the total to us is still less than $5 million.

Kathy Jenkins — Chief Financial Officer, Sagicor Financial Company Ltd.

Yes. That’s correct. It’s around $1 million, slightly less than $1 million actually, for this quarter in

Sagicor. After tax.

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Andre Mousseau — President & Chief Executive Officer, Sagicor Financial Company Ltd.

Right. Yeah, right. Okay.

Trevor Reynolds — Analyst, Acumen Capital Partners

Okay. So still fairly minimal. All right. Appreciate it. Thanks.

Operator

Thank you. That ends the question-and-answer session. I will now hand the call back to Mr.

George Sipsis for any closing remarks.

George Sipsis — Executive Vice President, Corporate Development & Capital Markets, Sagicor Financial

Company Ltd.

Thank you, operator, and thank you for joining the call today, everyone. That concludes today’s

Q1 2026 results call. A replay of this call will be available for one month on our website and a transcript will be posted as soon as available. If you have any additional questions, please do not hesitate to reach out to any one of us. With that, thanks again for your participation and interest today. Have a great day.

Operator

And this concludes today’s call. Thank you for participating. You may all disconnect.

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