Q4 2024 earnings call transcript

FINAL TRANSCRIPT

Sagicor Financial Company Ltd.

Fourth Quarter & Full Year 2024 Earnings Conference Call

March 14, 2025 — 10:30 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

Anthony Chandler

Sagicor Financial Company Ltd. — Chief Financial Controller

George Sipsis

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

CONFERENCE CALL PARTICIPANTS

Meny Grauman

Scotiabank — Analyst

Trevor Reynolds

Acumen Capital Partners — Analyst

Darko Mihelic

RBC Capital Markets — Analyst

2

PRESENTATION

Operator

Good morning. My name is Constantine and I will be your conference operator today. At this time,

I would like to welcome everyone to the Sagicor Financial Company’s Fourth Quarter and Full Year 2024

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 the star then the number one on your telephone keypad. If you would like to withdraw your question, please press star then the number two.

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 fourth quarter and full year 2024 results. I’d like to highlight our disclosures are available under the

Investor Relations tab on our website at sagicor.com, which includes the press release, financial statements, MD&A, our annual information form, along with the unaudited supplemental information package containing core earnings, drivers of earnings, and additional disclosures. The link to our live webcast is available on our website and a replay will be available.

3

This conference call is open to the financial community, investors, the media, and the public, with a reminder that the Q&A period is reserved for financial research analysts. I will proceed to refer 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 U.S. 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 will pass the call on to our President and CEO, Andre Mousseau.

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

Thank you, George, and good morning, everyone. Thank you for taking the time to join us today.

It is our pleasure to discuss another solid quarter to end 2024. In our first full year of earnings including our Canadian segment, we recorded core earnings to shareholders consistent with our guidance and reported net income to shareholders in excess of core earnings. Our annualized core return on equity in Q4 shows our potential for further earnings growth both in 2025 and in beyond in the medium term.

4

We continue to make meaningful progress on our strategic initiatives, including collaboration between our operating segments, refreshing our technology, and improving our access to and cost of capital, all with the aim to reduce costs, drive growth, and ultimately expand our return on shareholders’ equity.

I’ll now hand the call over to our CFO, Kathy Jenkins, to discuss our consolidated and individual segment results. Kathy?

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

Thank you, Andre, and good morning, everyone.

As Andre mentioned, we are reporting a strong fourth quarter to cap off a solid year. For Q4, core earnings to shareholders was up 28% from 2023 to $28 million and net income to shareholders was $52 million. For full year 2024, Sagicor’s net income to shareholders was $98 million and core earnings to shareholders was $91 million, exceeding management’s revised guidance from Q2 2024 of $80 million to

$90 million. Revenues were $3.1 billion for the year compared to $2.5 billion for last year. New business

CSM of $166 million was within the revised guidance from Q2 of $160 million to $180 million, net of reinsurance. Our total net income for the year came in slightly ahead of core as we saw some positive asset price emergence in the fourth quarter.

Now I will give you some more detail on the segment financials.

Sagicor Canada’s sales production of $18 million in the quarter and $70 million for the year was consistent with management expectations, resulting in new business CSM of $12 million for the quarter and $46 million for the year. Core earnings to shareholders of $25 million for the quarter increased $3

5 million, or 16%, from the same quarter in prior year, reflecting an increase in expected investment earnings that was partially offset by unfavourable mortality experience. Net income to shareholders of $8 million for the quarter was lower than core earnings to shareholders due to unfavourable market-related impacts primarily from higher risk-free rates on surplus assets. Net CSM ended the year at $535 million, which was a slight decrease quarter over quarter resulting from changes in assumptions and unfavourable currency impact that was offset by organic CSM growth.

Sagicor Life USA generated $152 million of new business production for the quarter and $894 million for the year. The level of production in Q4 was lower than our targeted annualized run rate and we know where today, 10 weeks into Q1, that our production in the first quarter of 2025 is going to be over $300 million. We believe that we may still see quarterly volatility in the production due to the size and competitive environment but measured in aggregate over years we believe we will be able to meet our growth targets, albeit in a bit of a volatile manner. In the meantime, core earnings to shareholders this quarter for the segment of $11 million increased $1 million, or 12%, from the same quarter in the prior year, driven by higher net investment income on the growing investment portfolio. Net income to shareholders was $42 million for the quarter and was higher than core earnings to shareholders due to market related impacts, including gains on equity investments and favourable tax recoveries. Net CSM decreased by $11 million to $155 million quarter over quarter due to basis changes from the previous quarter, lower volume of premiums written in Q4, and the impact of the introduction of a new reinsurance agreement.

Sagicor Jamaica capped off a lower-than-expected year with a soft fourth quarter. Sagicor’s share of Sagicor Jamaica’s core earnings to shareholders of $8 million for the quarter declined from $13 million

6 for the same period in the prior year due to unfavourable experience and the impact of rising interest rates, offset by improved margins on core non-insurance activities and lower financing costs. Our share of reported net income to shareholders of $10 million this quarter declined from $17.3 million for the same period in the prior year due to marginally lower results from the long-term insurance and commercial banking division. However, we see signs of reversion to historical performance in 2025 with strong net premium growth across all business lines and improved margins from repricing of Group Health products.

The commercial banking division continued its year-over-year growth trend in profit as a result of higher net investment income and fees, and the investment banking division reversed the prior year’s unrealized capital losses leading to a meaningful improvement in profit. Net CSM of $282 million increased 2% quarter-over-quarter, as strong new business CSM of $15 million was offset by changes in assumptions.

Sagicor Life core earnings to shareholders of $6 million for the quarter increased 21% over Q4

2023, reflecting improved profitability from short-term and long-term businesses from repricing and product-offering adjustments and improved insurance experience and lower incidence of onerous contracts in the long-term business. Net income to shareholders of $12 million for the quarter was higher than core earnings to shareholders, primarily due to positive market experience. In 2024, core earnings to shareholders was $26 million and net income to shareholders was $39 million. Net CSM was $248 million, increasing from $244 million at the end of September 2024 due to growth in organic CSM of $7 million driven by strong new business sales, partially offset by changes in actuarial assumptions of $4 million.

Returning to the consolidated picture, Sagicor remained well capitalized in Q4. The Group-LICAT ratio was 139%, which improved by three percentage points year over year, and our financial leverage ratio was 27.3%. Our access to capital further improved in the fourth quarter through raising a C$200

7 million term loan facility, which was used to repay the balance of the more expensive U.S. dollar debt used to acquire ivari, improving both our cost of capital and improving our natural hedge against ivari’s net asset position in Canadian dollars. Our book value per share finished the quarter at US$7.08 or C$10.19.

Our deployable capital, or shareholders equity plus net CSM to shareholders, was $2 billion, or US$15.02, or C$21.61 per share.

I will now provide an update to our guidance on key measures. We expect core basic EPS for 2025 to be approximately between 74 cents to 80cents per share. This translates to approximately $100 million to $108 million of expected core earnings to shareholders. That represents 14% to 23% growth on a per- share basis and 15% to 24% growth on an absolute constant currency basis. New Business CSM is expected to be between $180 million to $200 million. Our 2026 target for core earnings to shareholders growth is

10% plus growth beyond 2025 levels, and thereafter we project a target core return on shareholders’ equity over the medium term of 13% plus, and targeted core dividend payout ratio over the medium term of 30% to 40%.

With that, I hand it back to Andre.

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

Thank you very much, Kathy.

Beyond our strong financial results, we continue to be excited about our prospects for 2025 and beyond. Our internal initiatives, all of which are geared to generate strong, sustainable return on equity growth, are showing measurable progress. We continue to grow the asset base in our U.S. business and

8 intend to accelerate this in 2025.We believe this will continue to offer a robust growth opportunity and deliver to us very high marginal returns on our capital.

Our operating segments are working better than ever together to drive technological change and efficiencies that will allow us to cement our businesses where we have large market shares and continue to grow efficiently where we are relatively small, and our balance sheet management is incrementally improving our cost of capital. With these initiatives we believe we can target a 13% or better return on shareholders’ equity towards the end of our three-year planning cycle.

We are pleased to deliver this growth while accelerating our return of capital to shareholders. We repurchased three million shares in 2024 at a significant discount to book value, which contributed to a

4% net reduction in our share count through the year. This helped drive our book value per share higher than the rate of our retained earnings. Our increased projected core earnings, our robust capitalization and liquidity, and reduced share count are all enabling us to provide our shareholders with a meaningful increase in our quarterly dividend. At this payment level we anticipate we will be at approximately the midpoint of our 30% to 40% target core dividend payout ratio for 2025. And while economic uncertainty may cloud certain macroeconomic variables, we believe our core initiatives will enable us to continue to grow our return on shareholders’ equity, and I am excited about coming out of our quiet period to get back out talking to some of our new shareholders who have had a good run so far and to communicate that we believe there is a lot more good news to come.

With that, George, we’re ready to start the Q&A period.

9

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

Company Ltd.

Yes, we are. Operator, please open the lines for 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 number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please make sure you lift your handset before pressing any keys.

Your first question comes from the line of Meny Grauman from Scotiabank. Please go ahead.

Meny Grauman — Analyst, Scotiabank

Okay, great. Thanks. Just a few questions. One, you talked about lower-than-expected production in the U.S., I think also for the quarter but for the year as a whole, and you talked about the impact of rate volatility on that, so I’m just wondering if you could flesh that out a little more in terms of the impact of rate volatility on competition. I’m trying to understand what you’re getting at in terms of rate volatility and how that impacted the production.

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

10

Right. Thanks, Meny. I’ll take a little step back and talk about what we’re trying to achieve, because we see the variability of production of our U.S. business as a feature of our business model as opposed to a bug, so to speak. What we’re trying to do is, over the next three or four years, grow our balance sheet towards $10 billion in the U.S. and to do that at the best risk-adjusted spreads that we can. We are nimble when we do that, and because of the size of the market, we are able to throttle production quite significantly from one week to the next. We’re constantly making judgments on whether the risk-adjusted spread is favourable relative to other times that we’re able to generate that production, because when we take this business onto our books, we’re going to be investing the capital right up to the duration to match the liability, and we’re going to take profit off that spread for the next five years if it’s a five-year annuity.

So, if you look back over the last two or three years, our production has oscillated with a significant degree of variability from things in the mid-hundreds in a quarter to up towards $400 million in any given quarter. We think the ability to pick our spots adds, in aggregate, 10 to 30 basis points of additional spread compared to if we just targeted keeping production flat every month and every quarter. Therefore, if you’re looking to bring on $1 billion of new annuities in a given year, the extra 10 to 30 basis points is $1 million to $3 million of pre-tax income a year, every year, for the five years that you have those products.

And once you get towards a $10 billion balance sheet and add that up, it starts to become material amounts of net income. It’s all a way of saying that we’re deliberately picking our spots.

The spread is a function of where we can invest, which itself is a function of our sourcing of base rates and of credit spreads. It’s also a function of the crediting rates that you need to be in the market and to be competitive. The specific thing that happened in Q4 was there was a moment in time when certain

11 markets were priced to perfection in terms of the impending regime change and the early days of the regime change in the United States, and a soft landing, and equity markets anticipating to go up forever.

Our adjudication at the time was that the spreads weren’t as good as they would be in following quarters.

As a result, we backed off on the throttle and ended up with lower production. Now we’ve disclosed in

Kathy’s comments that that trend has reversed itself, because we see a much more positive spread environment that has come with the market’s decoupling of the thesis of the economy being priced in perfection. We’ve also seen a better rate environment, so we can sit here today, 10 weeks into the quarter, and know that we’ve got more than $300 million that’s going to close in Q1.

So, we see this as deliberate. As I mentioned in my comments, we intend to accelerate the growth of our U.S. business, and what I would say to you and to our investors is that we intend to put more than

$1 billion of new business on our books in 2025. Thinking about ourselves as shareholders, we’re going to put that production in where we see the best economics, and we intend for that production to be somewhat variable quarter over quarter. For example, we may show up with $350 million to $400 million of production in Q1, and we may show up with meaningfully less than that in Q2 if we determine that’s the optimal thing for our long-term economics.

Meny Grauman — Analyst, Scotiabank

So just to make sure I understand what you’re saying, are you saying that you’re willing to trade off volume for profit? Or it’s more just the message more just to expected volatility in the sales numbers on a quarter-to-quarter basis and that it could be quite extreme depending on the circumstances?

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

12

We have aggregate targets, so what we’re willing to trade off is volatility for excess spread. What

I’m saying is that we believe that, by accepting that one quarter it may be $150 million and another quarter it may be $400 million, we believe we can generate better spreads than if we simply aimed for $250 million to $275 million every quarter. If you draw a line through our production, we expect that line to trend up, and you can look at this as an average on a four- or six-quarter rolling basis. We would intend for that to tick up, because we intend to put more than $1 billion of volume on in aggregate in 2025 and beyond.

We’re saying that we think it’s in the best interest of our shareholders for us to pick our spots and for the production to be volatile quarter over quarter.

Meny Grauman — Analyst, Scotiabank

Understood. And then maybe as a follow up, just connecting it to the bigger picture - we are in a very volatile environment in terms of economic expectations and rates, and I think you’re acknowledging that, I mean beyond the volatility in your sales numbers, the actual volatility out in the market. So, the question is that you’re acknowledging that volatility, but at the same time you seem to be pretty certain about over $1 billion in production in the U.S. Your financial targets for 2025 are strong and pretty clear.

What gives you that confidence in those targets given the environment that we’re in?

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

First, in the U.S. annuities market, there are a couple of things that are going on. The first is that we see equity volatility as positive for the fixed annuities space; the fixed annuities market is big and robust, but the true addressable market is all retiree savings, in effect. Substitutes for that can involve products like mutual funds or other ways to access equity that don’t have the same certainty that a fixed

13 annuity has. So, when you see a meaningful drawdown in the equity markets as we’re experiencing, I don’t know about today, but over the last couple of weeks, it reminds the addressable market that equity markets don’t go up in a straight line. If you think about that, the equity volatility that started at the beginning of COVID back in 2020 went a long way in kickstarting the strong growth in the annuities market going back five years ago. And then, the investing environment is a good one for spread investors right now. We play in a part of the credit stack that is overwhelmingly investment grade, and we continue to have confidence in how our portfolio will work out. We remain confident in the robustness of investing and the demographic trends that are driving the annuities market, with the baby boomers reaching retirement age persisting.

More broadly, when we talk about confidence in continuing to deliver earnings growth, we have a view around the strategic initiatives that we have talked about or that I talked about earlier in the call - there’s a bit of reversion to the mean. We believe that after a tough couple of years for our Caribbean businesses, we’re seeing green shoots on that. Where we’ve got more torque on our financial statements in our Canadian and U.S. business due to the size of the assets, we have a good idea where some of that margin expansion will come from as we work to drive efficiencies in those businesses.

Meny Grauman — Analyst, Scotiabank

Got it. And just a final question - in the earnings release and in your commentary upfront, there’s talk about technology refresh. I’m wondering if that is baked into the guidance for 2025-2026, or could that be a headwind to these targets? I just want to clarify that.

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

14

The costs of it are baked into the guidance. When we talk about getting through a 13% ROE, and we have internal targets that are higher than that, it is getting out into 2027 and beyond where we would start to see the effects of some of the investments that we’re making in 2025 and 2026.

Meny Grauman — Analyst, Scotiabank

Got it. Thank you.

Operator

Your next question comes from the line of Trevor Reynolds from Acumen Capital. Please go ahead.

Trevor Reynolds — Analyst, Acumen Capital Partners

Good morning. I was just curious about the primary drivers of your expected growth in new business CSM from the $166 million level this year to the $180 million to $200 million next year and 10% beyond. If you could just touch on what the primary drivers of that are.

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

The big one would be accelerated production in our U.S. business. We had about $850 million of new business production in the U.S. this year, and we’re targeting through $1 billion for 2025. So mechanically, that’s mostly it. I don’t think we’re projecting meaningfully different margins. Our Canadian and Caribbean businesses continue to generate net CSM in excess of what they’re replacing, so they continue to grow as well.

15

Trevor Reynolds — Analyst, Acumen Capital Partners

Okay. And as you look at the longer-term ROE target, I was just wondering how we should think about the growth towards that target. Is it expected to be a fairly linear growth towards that, or how will that play out over the next few years in your eyes?

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

The progression is more linear than not. It’s a combination of the organic growth that the businesses naturally generate along with the U.S. being a bigger proportion of our earnings with the overlay of our other strategic initiatives to improve cost structure and improve the cost of funding of our balance sheet. As we’re looking out to 2027, that’s where we start to get into the range of that medium- term guidance. We wouldn’t want to put a hard number around our 2027 earnings; it’s a little early for that, but that’s how we’re planning.

Trevor Reynolds — Analyst, Acumen Capital Partners

Okay, great. And then just to touch on those cost reductions that you are targeting, where do you sit in terms of those targets, what’s the time frame for those cost reductions, and where are they coming from?

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

It’s throughout all of the segments, the operating segments, and head office. There’s quite a list of initiatives, such as bringing together procurement policies and having the businesses on common

16 technology platforms that allows us to bring down the cost of technology, and eventually let the units work together to service each other, which can lower our cost of delivery and allow our people, as we upgrade the technology, to be deployed to value-add initiatives as opposed to manual and administrative ones.

Trevor Reynolds — Analyst, Acumen Capital Partners

Okay, great. Just a last quick one. Obviously, the Company bought back quite a bit of stock last year. What do the plans look like in terms of share buybacks moving forward?

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

We intend to keep our normal course issuer bid active. As we’ve accelerated our engagement with the equity market, one of the things that has resonated with some of our new investors is the dividend stream and its growth. If you look at what we’ve done with the dividend, we’ve increased it by 12.5%, and we may start to tilt the return of capital towards dividends as opposed to buying back so much stock every year.

Another comment we have heard from investors is that they’d like to see more liquidity in the stock, and we don’t necessarily want to be competing to buy what’s out there for sale. We reserve the right, if the stock reverts to even wider discounts to fundamental value, to lean back in, but we’ve started to see green shoots of a market develop and so one of the things we want to do is to provide our investors the ability to anticipate not only a robust dividend but one that will grow year over year as we grow our

17 net income. So, all that to say, please don’t model in us shrinking our share base by 4% every year, but we’re still going to keep the option open.

Trevor Reynolds — Analyst, Acumen Capital Partners

Okay, great. Thanks for taking my questions.

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

Thank you.

Operator

Ladies and gentlemen, as a reminder, if you’d like to ask a question, please press star followed by the number one on your touchtone phone. If you wish to decline from the polling process, please press star followed by the number two. If you’re using a speakerphone, please make sure you lift your handset before pressing any keys.

Your next question is from the line of Darko Mihelic from RBC Capital. Please go ahead.

Darko Mihelic — Analyst, RBC Capital Markets

Hi. Thank you. Good morning. I just have a couple of modeling questions. Should be pretty brief.

The first question is for Canada. When I look at the expected investment earnings of $30 million for the quarter, substantially better than last year and last quarter. Presumably you’re making some changes with

18 your investment portfolio. I’m just curious, is $30 million a good quarterly run rate to assume for Canada for 2025?

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

If we’re going to get into drivers of earnings modeling on this individual question, Kathy, do you think it’d be better to do this in a holistic form with the analysts?

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

I think so.

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

Can we defer on that, Darko?

Darko Mihelic — Analyst, RBC Capital Markets

Yeah, sure, no problem. Another question then. For the head office, corporate, the Playa shares, there was a very big jump in stock price very late in December. Was that mark to market included in that result? And since then, I think the news has come out that Playa is being purchased by Hyatt. So maybe you can confirm if that’s in the quarter here in the expected earnings for that segment?

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

You’re correct. We own 11 million shares of Playa, and we mark those to market mostly through non-core income. When they announced a strategic process the night before the night before Christmas,

19 the stock went up and then they announced a definitive transaction in Q1. So, we marked it to market at the end of December, and now that there’s certainty around it, there’s a little bit more gain in Q1. Our shares were distributed throughout the organization, throughout the different segments.

Kathy, do you want to break that down?

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

Yes. So this quarter we had after-tax gain of $43.9 million on our Playa shares, so $36.8 million in the U.S., $2.7 million in head office, and $4.4 million in our SLI segment.

Darko Mihelic — Analyst, RBC Capital Markets

Okay. And that’s excluded from core earnings? Or was that included in core earnings?

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

That’s excluded from core earnings.

Darko Mihelic — Analyst, RBC Capital Markets

Okay. And what is the rationale for splitting it into the segments?

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

We were using it as an asset to back capital in a couple of different spots. Basically, you can use a small proportion of equities to back capital, so we had some of it in the U.S. company and some of it in

20

Bermuda for the benefit of both SLI and the U.S. through our internal reinsurance company. That will emerge in Q1 with a little bit more of a gain, likely in aggregate about another $10 million, and then that’ll turn into cash that we can deploy. Out of that, we’ll get a small capital bump because we have lower capital charges on non-equity than we do on equity. In the background, it frees up some capital and liquidity for us as well. So, in aggregate, our share ownership of Playa has been a very successful adventure.

Darko Mihelic — Analyst, RBC Capital Markets

Okay. Since most of it was put into the U.S., presumably there is where you get the biggest impact for capital, correct?

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

Yes, correct. One of the things that helps us with reaccelerating growth in the U.S. is we have had some capital windfall; we can grow the business faster without capital injections because of how that’s worked through.

Darko Mihelic — Analyst, RBC Capital Markets

Okay. That’s very helpful. And while we’re sticking with that segment, you mentioned that you get about $12 million of savings in interest costs because of all the financial management of debt. Is there any more in the pipeline or should I just consider now for that segment to just lower the financing cost? Or is there more, Andre, that’s on the way? Or do you think there’s more? Maybe I’ll rephrase it that way.

21

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

We have now, as of Q4, replaced the expense of debt. It was worth paying double-digit interest rates to be able to get the Canadian acquisition across the line, but that’s all been refinanced. So, as we grow, we may put more debt on the books to manage our debt to cap closer to our target in the high 20s, but that will be incremental debt as opposed to replacement debt. If you look at where we’re putting new debt on the books, in and around 6%, it matches our overall cost of debt funding, because the old bonds that we had from back when we were sub-investment grade in the international market were done in such a radically different interest rate environment that the cost of debt is about the same.

Darko Mihelic — Analyst, RBC Capital Markets

Okay, that’s helpful. If we’re going to have a follow-up call on Canada, my other modeling question was on the CSM for Sagicor Life USA; so maybe we could take those offline. Thank you.

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

Yes, the CSM in Q4 was a little funny because some of the CSM goes away to the reinsurers. We did all of our U.S. reinsurance in Q4, so the new business CSM was not proportional to production in Q4 for the U.S. We can talk more about that in a modeling session.

Darko Mihelic — Analyst, RBC Capital Markets

Okay. Awesome. Thank you very much.

Operator

22

Your last question is a follow up from Meny Grauman from Scotiabank. Please go ahead.

Meny Grauman — Analyst, Scotiabank

Thanks for taking this question. Just about 2025 targets, I think in the past you’ve been able to give us some guidance in terms of segments, so I just wondering if you’re able to do that on a segment basis in terms of what to expect in 2025. If you could break it down by the segment, that would be helpful.

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

We’re choosing not to do that right now. If you look at what we did this year, we had the initial guidance and then we updated it. At some point during Q2, I believe we’ll refresh the guidance, and we’ll include segment guidance along with that. That’s the plan for now.

Meny Grauman — Analyst, Scotiabank

Got it. Thanks, Andre.

Operator

There are no further questions at this time. I’d like to turn the call over to Mr. George Sipsis for closing comments. Please go ahead, sir.

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

Company Ltd.

23

Thank you, operator, and thank you, everyone, for joining the call today. A reminder, 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 weekend, everyone.

Operator

This concludes today’s conference call. Thank you very much for your participation. You may now disconnect.

24