Q4 2025 earnings call transcript

FINAL TRANSCRIPT

Sagicor Financial Company Ltd.

Fourth Quarter & Full Year 2025 Earnings Conference Call

March 12, 2026 — 10:00 a.m. E.T.

CORPORATE PARTICIPANTS

Andre Mousseau

Sagicor Financial Company Ltd. — President & Chief Executive Officer

George Sipsis

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

Markets

Kathy Jenkins

Sagicor Financial Company Ltd. — Chief Financial Officer

CONFERENCE CALL PARTICIPANTS

Pranoy Kurian

National Bank Capital Markets — Analyst

Mike Rizvanovic

Scotiabank — Analyst

Trevor Reynolds

Acumen Capital Partners — Analyst

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PRESENTATION

Operator

Good morning. My name is Joelle and I will be your conference operator today. At this time, I would like to welcome everyone to Sagicor Financial Company’s Fourth Quarter and Full Year 2025

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 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.

Thank you, operator, and hello, everyone. Thank you for joining us today to discuss Sagicor’s fourth quarter and full year 2025 results. As a reminder, our disclosures are available at our Investor

Relations website at investors.sagicor.com, which includes the 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 a 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, including guidance, 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’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.

We are pleased to report on the conclusion of an exceptional 2025 with another quarter of solid core results. Our full year core earnings delivered record core earnings to shareholders of $142 million, up 57% over last year and well above our guidance. Our core return on shareholders’ equity for the year was 14.2% and this was helped by, in aggregate, about $15 million of positive emergence from our

4 short-term and long-term insurance portfolio. Absent this positive emergence, which we do welcome, of course, as a good sign of our overall reserving, we believe we’re currently running at an approximately

$125 million to $130 million core earnings to shareholders run rate. What that means is we’ve hit our medium-term target that we issued back in 2024 of a 13% ROE about a year ahead of schedule. And this reflects all the work that we’ve done throughout our portfolio of operating companies to enhance our returns on equity there and how we’ve improved our debt cost of funding.

2025 was a banner year operationally, too. Our U.S. business continued its asset growth by nearly $1.0 billion to $6.8 billion as we continue to get to scale in that market. Our Canadian subsidiary completed a major milestone in its digital transformation, completing an industry-leading migration of all of its admin data for its 750,000 in-force policies to a modern, cloud-based system that will allow quicker and more efficient product and service launches, better scalability, cost improvements, and cost certainty. And, we capped off the year with the announcement of a definitive agreement to merge our two Caribbean subsidiaries under a single publicly-listed entity. This incredibly exciting development will allow us to launch a full AI-driven digital transformation initiative in our Caribbean operations at full scale and ultimately create an exciting additional pillar of ROE growth for our shareholders.

I’m going to come back to this and more on our forward outlook after Kathy gets through a more detailed financial review of 2025, so let’s go to that. Kathy?

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

Great. Thank you, Andre, and good morning, everyone.

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As Andre mentioned, we are reporting a strong fourth quarter of 2025 to cap off another outstanding year. For Q4, core earnings to shareholders was up 13% from 2024 to $32 million. For full year 2025, Sagicor’s core earnings to shareholders was $142 million, exceeding management’s revised guidance of $120 million to $130 million. In Q4, net loss to shareholders was $14 million, reflecting some continuing volatility from market movements and foreign exchange, and for the full year, net income to shareholders was $67 million. Total comprehensive income to shareholders, which, in particular, tells the full story of our foreign exchange position through both our net assets and liabilities, was between reported and core earnings at $110 million, and allowed us to grow shareholders’ equity by $77 million while returning over $40 million of capital to shareholders between our dividends and share buybacks.

Revenues were $3.0 billion for the year compared to $3.1 billion for last year. New business CSM of $167 million was within the revised guidance of $155 million to $175 million, net of reinsurance.

Now I will give you some more details on the segment financials. Sagicor Canada’s sales production of $17 million of annualized new premium for the quarter and $69 million for the year was consistent with management expectations, resulting in new business CSM of $12 million for the quarter and $44 million for the year. Core earnings to shareholders of $27 million for the quarter and $103 million for the year increased 12% and 19% year-over-year, respectively, reflecting improved net investment results and insurance experience in line with expectations as compared to unfavourable insurance experience in Q4 2024. Net income to shareholders of $9 million for the quarter and $76 million for the year was lower than core earnings to shareholders due to unfavourable market-related impacts from lower asset prices due to higher Canadian interest rates. Net CSM in aggregate increased

1% quarter-over-quarter to end the year at $566 million.

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Sagicor Life USA’s new business production was $268 million for the quarter, resulting in $1.3 billion of total production for 2025, which is our highest ever year of production and in line with our expectations. This resulted in AUM growth of over $900 million year-over-year. Core earnings to shareholders for the quarter of $8 million were slightly lower year-over-year driven by increased operating expenses in support of business growth. Core earnings to shareholders of $41 million for the year increased 2% year-over-year as increased net investment results were offset by increased cost allocations. Net loss to shareholders of $12 million for the quarter was lower than core earnings to shareholders due to market experience losses of $18 million from interest rate movements impacting our liabilities more so than our assets, similar to what we saw in Canada. Net income to shareholders was $8 million for the year. Net CSM was $151 million, flat quarter-over-quarter.

Sagicor Jamaica recorded strong new business sales in both long-term and short-term insurance lines and the commercial banking segment showed profitable expansion in its loan and credit card portfolios with higher net interest margin and fee revenues year-over-year. Sagicor’s share of Sagicor

Jamaica’s core earnings to shareholders of $12 million for the quarter and $48 million for the year both increased year-over-year driven by better margins on short-term business, favourable insurance experience, and improved net interest margin and fee revenue in the commercial banking business.

Sagicor’s share of Sagicor Jamaica’s net income to shareholders was $51 million for the year. Net CSM was $293 million, flat quarter-over-quarter. Notably, this strong performance was inclusive of the net effect of Hurricane Melissa in Q4, which ended up, per our previous guidance, being barely material.

Sagicor Life posted strong new business sales in the quarter and in 2025, reflecting higher single premium annuities and general growth in the portfolio as a result of repricing initiatives. Core earnings

7 to shareholders of $7 million for the quarter and $42 million for the year increased 17% and 59% year- over-year, respectively, due to improved profitability in the short-term business from price adjustments and favourable insurance experience. Net income to shareholders of $16 million for the quarter and $57 million for the year were higher than core earnings to shareholders due to positive market experience.

This showed the opposite effect of interest rate movements to our North American businesses as our

Caribbean segment has a modestly net short asset position compared to liabilities from a duration point of view, as opposed to our North American segments, which have long net asset positions relative to our liabilities. Net CSM was $262 million, an increase of 3% quarter-over-quarter.

At our head office, other operating companies, and adjustments segment, core cost to shareholders was $23 million for Q4, consistent with the prior quarter. For 2025, core cost to shareholders was $92 million, a 2% improvement from the prior year. Net cost to shareholders was $37 million for Q4 and $126 million for 2025.

With these results, Sagicor remained well capitalized in Q4. The Group LICAT ratio was 136% and our financial leverage ratio was 26.9%. Our book value per share significantly increased during the year to US$7.65, or C$10.49. Our deployable capital, or shareholders’ equity plus net CSM to shareholders, was $2.2 billion or US$15.95 per share, or C$21.87 per share.

We are also pleased to announce another increase to our dividend, making this the third March in a row. Our new payout will be US 7.5 cents per share, or US 30 cents annualized, about an 11% increase over last year. Even with this payout, we anticipate we will be towards the bottom of our 30% to 40% core earnings target payout ratio, which reflects our belief that we can continue to generate

8 strong risk-adjusted returns by reinvesting the majority of our earnings and growing our future earnings going forward. And we will be in a good position to keep delivering a growing dividend as we grow our earnings.

On that note, I will hand back to Andre to talk about that forward outlook.

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

Thank you, Kathy.

This really is an exciting time for Sagicor and not just because we believe we’ve more than executed on the original vision that we set out in 2022 and 2023 when we were putting this asset portfolio together. I remember back in 2023 when we originally closed the acquisition of ivari and had it form a cornerstone of our combined business, we had guided in our year-end earnings release to about

$90 million to $105 million of core earnings and we said that we believed we could eventually get the business to a 13% core return on equity or beyond, and we used “medium-term target” as a euphemism for 2027. Here we are a couple of years later and we’ve exceeded that. Even without the help of the positive insurance emergence in 2025, we are running at a solid 13% ROE today and we have very meaningful upside beyond that. So, I’m going to take some time to go through some of the details on

ROE expansion that we see from here. We believe that we have three robust avenues for growth, all within our control, which can drive ROE expansion going forward well beyond our old guidance. And these three things are the continued growth in our U.S. annuities business, which we have talked about over the last couple of years, margin expansion in our Canadian business, and a huge digital transformation opportunity in our newly combined Caribbean segments.

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So, first of all, I’d like to talk about our U.S. business, which we continue to believe will drive our asset growth going forward. We challenged ourselves to deliver over $1 billion of new annuities in 2025 and we surpassed that while maintaining a laser focus on spread discipline and not compromising on asset quality to do it, all within a competitive environment. We grew our assets in that segment to nearly $7 billion and we have a clear path over a three-year planning cycle to get that near $10 billion, where we believe we’ll see some meaningful margin expansion. In this past year we made some additions to this segment’s expense base through new systems and executive hires, which has set us up to grow earnings more than proportional to that asset growth going forward. That’s number one.

Number two, we have the Canadian business. Now, this one is more mature than our U.S. business. I think I mentioned it before, there are about 750,000 policies and, with our niche distribution, we have relatively modest new business generation relative to the size of the back book. But, the financial margins in this segment are strong and they have outperformed our expectations going back to

2023. And in 2025 you really saw that come through in the asset growth of the universal life policies and ultimately through the drivers of earnings in the strong investment earnings performance. We believe that there is more asset margin growth possible by applying some of the lessons that we’ve learned on our posture on our U.S. balance sheet and porting them to the Canadian balance sheet, which still has a very, very conservative posture with a lot of low-yielding provincial assets and other low-yielding fixed income instruments.

Third, we have an enormous opportunity to deliver value through the combination of our

Caribbean subsidiaries into one entity called Sagicor Group Caribbean. Prior to this combination, which we believe will close in the fourth quarter of 2026 or thereabouts, our Jamaican subsidiary was

10 constrained from full cooperation with the rest of Sagicor by the dynamic of having a differing shareholder base. Now, with this combination, we are working hand in hand with our partners in the

Caribbean to drive not just a combination with traditional synergies, but to use the combination as a catalyst to run a full digitally-enabled transformation of the entire way that we do business in the

Caribbean. And, whether good or lucky, we are doing it at a fabulous time, because the emergence of AI powerful enough to tackle the data transformation challenges involved will make this a faster and more comprehensive transition than what we could have embarked on even 12 months ago. This project is going to require a robust investment of time and resources but we have conviction that we will look up at this business in two or three years and find it a truly transformed champion, ready to solidify and build upon our market-leading position in the English-speaking Caribbean and beyond.

So, I’ve talked about three initiatives here. We believe that each of these initiatives, fully realized, has the opportunity to contribute between 1% and 2% return on equity growth to our overall financial results over the next three to five years. So, with full follow-through on these initiatives, we’re looking at a vision of a company that would be delivering ROEs that would be beyond the midpoint of mid-teens and would be delivering significantly more net income than we are today, again, over a three- to five-year planning period.

So, let me tie this back to the nearer term. We delivered $142 million of core earnings to shareholders in 2025. Unaffected by the positive results that we got off our insurance book, we see a run rate today of between $125 million and $130 million that would carry into 2026 and have some growth based on compounding of capital absent these strategic initiatives. Now, we see 2026 as an

11 investment year and so we’re not putting out a specific core earnings target or ROE target, and there are a number of reasons behind this.

First, when our Caribbean subsidiaries merge at some point this year, the geography and proportions of the earnings and the drivers of earnings, or how the financials come together, are going to change. This might happen in the third quarter or the fourth quarter or potentially even in the early parts of next year. But mechanically, the proportion of earnings are going to change as our proportion of

SLI in the Southern Caribbean goes down from 100% to about 55%, our ownership of Jamaica will go the other way from 49% to about 55%, and then our internal financing costs, pro forma, will improve by about $20 million or so as we restructure and retire intercompany debt.

In addition to this, there are going to be direct and indirect costs, first around the closing of the transaction itself and then around staffing and executing the transformation. And we’ll continue to make investments in people and systems so that we know that we’re in a proper position to manage growth. A lot of these costs may run through the non-core line, but not necessarily all. In aggregate, since converting to IFRS 17, we’ve actually had higher reported net income than core earnings to shareholders, but in 2026 we would not plan it that way, as we believe that we’re going to have some of these closing costs and transformation costs around the Caribbean transaction, which we believe as extraordinarily high IRR investments in forward earnings.

So, looking out to 2027 and 2028, once these transaction costs have gone away, there we have conviction from the early wins on each of these three initiatives, and so the guidance we’re giving is core return on shareholders’ equity, taking no view on either positive or negative emergence from the

12 insurance portfolios, of approximately 14% in 2027 and approximately 15% in 2028. And at those levels, we would see plenty of upside potential beyond that in the years to come and we’re putting guidance out here that is based on these initiatives that we view as within our control.

So, there’s a lot there to digest. We’re happy to be here putting some meat on the bone of some of the things that we have right in front of us to accomplish. We’re really proud of what we’ve accomplished over the last three or four years and we’re very excited to build on it and go and do it again. So, as this goes forward, we intend to continue to put details around this in our public disclosure, to engage with analysts, to engage directly with our investors, and we’re very excited about that. And in the meantime, if there are any immediate questions, George, I think we’d be happy to take them.

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

Company Ltd.

Thank you, Andre. With that said, operator, we can begin the Q&A.

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 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 two. If you are using a speaker phone, please lift the handset before pressing any keys. One moment please for your first question.

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Your first question comes from Pranoy Kurian with National Bank Capital Markets. Your line is now open.

Pranoy Kurian — Analyst, National Bank Capital Markets

Hi. Thanks for taking my question. I just had a question on expenses. Could you give us some colour on the year-on-year increase in Canadian and the U.S. segment expenses? I think you cited business growth as a reason for the increase in the U.S.?

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

From a big picture point of view, there are two things that are happening at the same time. The first one is, as I mentioned in the prepared remarks, as we’re growing the business, we’re making sure that we’re developing the people and the systems to be able to be responsible stewards of that gross margin growth. If you look at the gross margin growth in the North American segment in aggregate, and compare 2023 to 2025, you’d say, okay, it makes sense that you’re putting more expenses in there for that.

Now there was a second piece in Q4, which is, for a matter of tax planning, we’re being more structured about allocating expenses down into the operating segments where costs can be appropriately offset against taxable net income. We have executives at kind of a non-taxable holding company, even me, I’m the Chief Executive of SFC but I’m also the Chief Executive of our North

American subsidiaries. So, to manage down our overall tax rate, we’re allocating a bit of cost down

14 appropriately into the operating subsidiaries and so there’s kind of a one-time step change of expenses in Q4.

Pranoy Kurian — Analyst, National Bank Capital Markets

Can you elaborate on the impact on the annual assumption review, so the CSM, there was a negative impact of around $12 million?

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

That’s kind of a knock-on effect of, and Kathy, you could expand on this, but it’s kind of a knock- on effect of the expense run rate. CSM is just one way for earnings to emerge, but if you have a $12 million reduction in CSM, maybe that’s $1 million or so less of CSM emergence out of the operating subsidiary on an annual basis, but then it’s offset by less expenses up at the head office. So it’s just kind of CSM math, but it ends up being a bit of a wash. By definition, that ends up being a wash. Kathy, is there anything else you’d say to that?

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

Yeah, I would mention that, if you recall, in Q4 is when we do our annual assessment of our expenses, or expense studies, and as a result of that we identified, through inflation and other factors as we’re growing the business, there are additional expenses. Some of that would be what you’d call maintenance expenses that would then be part of the actuarial assumptions. So, to the extent that the portfolio has CSM, increases in the maintenance expenses would reduce CSM. To the extent that there isn’t existing CSM, then it runs through the P&L. So this is part of our annual assumption review.

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Pranoy Kurian — Analyst, National Bank Capital Markets

Right. And I just had a second question on private credit. So there’s been some scrutiny on these asset managers with in-house insurance arms and some of these players are quite active in the fixed annuity sales space, and you’ve mentioned competitive spread environments in the past, so I was just wondering, maybe over the medium term, could we see some indirect impacts? If there’s some negative impacts on private credit, could we see maybe a lower competitive environment in fixed annuities maybe with healthier spreads?

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

What I’d say is, our production in 2025 reflects production in a competitive environment, because in 2025, for the majority of the year, there was not this noise around private credit. That competitive environment includes players that were tied to the most aggressive of the private credit houses, which would include reinsurers that managed to keep their names out of the headlines, but also would include the larger entities where there’s headline risk. Those are the names that you’re reading about in the New York Times or the Wall Street Journal every day. They’re all tied, and they were all part of the competitive environment.

We have inched our way into some of the asset class, but it’s a very small proportion and we haven’t been in any of the adventurous assets. As the last few weeks have happened, we’ve gone and done a full portfolio review, and because of our conservative posture we’re underweight the sectors where there’s particular anxiety around software and other technology sectors where there’s either the

16 risk of disruption for AI or the risk that there’s a building bubble. All of those we are very underweight relative to, in particular, the more aggressive players.

Look, I want to be cautious about this, but all ends being equal, if the most aggressive private equity or private credit players need to become less aggressive, that improves the competitive dynamic.

Standing aside from this whole shift in asset allocation, there continues to be a huge demographic shift as the boomer bulge goes through retirement into these new products, and I can tell you anecdotally that global volatility, which we don’t like in aggregate, as a life insurer we are long economic growth and stability at a fundamental level, but I can tell you our U.S. plain vanilla annuity sales had their best week ever last week. And we didn’t raise rates but, it’s just when volatility happens and people remember that there can be volatility in the equity markets, the portion of their retirement savings that can go into these plain vanilla annuities, you know, I think people have woken up over the last couple of weeks and remembered why these are an important piece of the portfolio. So, I don’t want to jump up and down and say that this is good for the competitive environment, but you could sketch out that case.

Pranoy Kurian — Analyst, National Bank Capital Markets

All right. Thanks. That’s it for me.

Operator

Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one.

Your next question comes from Mike Rizvanovic with Scotiabank. Your line is now open.

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Mike Rizvanovic — Analyst, Scotiabank

Good morning. Andre, I wanted to go back to the ROE guidance for 2027, just so that I understand it. So it sounds like this year is more of an investment year. Can you talk a bit about the trajectory? And when you mentioned the 14%, that’s not exiting 2027, not like you’re getting there at the very end of the year, that’s for the full year. Correct?

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

Correct.

Mike Rizvanovic — Analyst, Scotiabank

Okay. And then the trajectory, so you’re not offering anything for 2026 but you are going to be investing. What sort of impact do you see on the ROE? I’m just wondering if there’s a bit of a retraction here before you start to see the trajectory going up.

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

Right. So we ran at 14.2% core ROE for 2025, the year that we’re talking about. That includes how your insurance portfolio performs relative to your reserves. In some years, that’s negative. And if you’re properly reserved, some years it’s positive. It was positive for us in aggregate in 2025, you know, enough to poke core ROE up by just over one point. So I sit here today and say, okay, absent these initiatives, you’d say, okay, your best guidance would be a 13% unaffected core ROE and maybe you’ll continue to have good emergence out of your insurance portfolio or maybe not, and we reserve not to

18 have a view on that, which would mean that, mechanically, as we compound our capital, you would have earnings growth, but you would not have ROE expansion.

What I do know is we intend to invest in closing and transaction costs in the Caribbean and the

Caribbean merger and then make a robust investment in a transformation project. I can sit here, not being encumbered by being an accountant, and say I think those are going to be non-core costs, but you have to be able to see where that’s going to come through in, you know, when you get together and do your reviews, what’s core and what’s non-core. So we’d rather not put a number on the table for 2026.

We’ll tell you throughout every quarter in 2026 where we think we would be running kind of absent one-time costs, whether that’s core or not, but it’s a lot easier to get conviction around the 2027 and

2028 numbers because we know where we’re running at now. We see some of these quick wins where we have high enough conviction to stand behind meeting or exceeding it, and so that’s why we’re putting a finer point on 2027 and 2028. And look, the implication, kind of getting at your first question around timing, is that by the end of next year we’ll be through a 14.0% ROE because we see it as accelerating.

Mike Rizvanovic — Analyst, Scotiabank

Got it. Okay. Thank you for that colour. And in terms of the three initiatives that you’ve outlined, is this relatively equally weighted? Just ballpark, it sounds like you’ve got three very distinct strategies or strategic initiatives here. Is there any one that’s a lot more meaningful in terms of getting that ROE up or are they all sort of playing a similar role?

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

They’re more similar than they are different. I would sit here on each of the three and say, mechanically, I’d be disappointed if we didn’t get a full percent of ROE expansion off each of them over a three-year cycle. Now, some of them have more headroom than others. I think the case for growth in the Caribbean could have the opportunity to really be transformative to the way that we do business in three to five years, so I think the cap on that is higher and would be pretty meaningful whereas, with the

Canadian investment expansion, fundamentally we’re a public company and we’re not going to get hyper aggressive, and so with that one, if I was to range bound the smallest of the opportunities, that would cap out at still a meaningful number, but maybe a 2% move in our overall ROE.

Mike Rizvanovic — Analyst, Scotiabank

Okay. Thanks for that. And just to sneak one last quick one, and just a quick numbers question, maybe for Kathy, but just the tax rate in the quarter, effective tax rate did come in a bit low. I’m not sure if it’s geographic mix of your earnings this quarter. But anything on the tax line that’s temporary? Does it sort of revert to recent quarters?

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

Kathy, that’s definitely for you.

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

Yes, I think it’s the mix of earnings, so that and some work we’ve been doing to plan.

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Mike Rizvanovic — Analyst, Scotiabank

So a lower tax rate versus, say, the last few quarters as a run rate?

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

It was mix. I would say probably a little premature for that, so it would be more conservative, but we are continuing to work on our effective tax rate.

Mike Rizvanovic — Analyst, Scotiabank

Okay. Thanks for the time.

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

Thank you.

Operator

Your next question comes from Trevor Reynolds with Acumen. Your line is now open.

Trevor Reynolds — Analyst, Acumen Capital Partners

Hey, guys. Just curious on Hurricane Melissa. Is that fully baked into the numbers now?

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

Kathy?

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

Yes. So I would say that most of it is in there. It’s in our core in terms of the claims, and we’re well reinsured. And then in our non-core, that’s where we have a little bit in terms of additional rebuilding of our infrastructure that was impacted, but in order of magnitude it was around $2 million net in our core and maybe $3 million in the non-core. And then, we only take a portion of that impact at

SFC. In terms of next year, there’ll probably be a little bit more in terms of non-core impacts, but again, the numbers are very small and we’re well reinsured in terms of the core impacts.

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

And Kathy, I think you mean to say a little bit more, a little bit incremental to this as opposed to more than what we saw in Q4.

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

Yes. Thank you for clarifying that. Yes. Just a little incremental.

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

The point here is it barely scratched materiality for Q4. And in terms of non-core stuff, we’re being good citizens and making donations to community initiatives and all that sort of stuff. But we’re talking the $1 and $2 millions of dollars. It’s the right thing to do. But I think the thing that we should take away from this, and we wanted to allude to this in Q4 without being too hasty, is that, both from an operational planning and from a financial exposure point of view, we’re responsible, and our anticipated

22 exposures, even to catastrophic events, and this was a once-in-a-generation weather event, just barely scratch materiality because of the safeguards that we have in place.

Trevor Reynolds — Analyst, Acumen Capital Partners

Great. Thanks for the update there. Just on the Caribbean transformation, so you kind of provided some guidance in terms of when we might see that take place in terms of your reporting, like what is the timeline on an actual digital transformation? Maybe just some updates on kind of the timeline of that actually occurring. Would that all be done when you start reporting under the new segment? Just curious on that.

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

We are embarking on a full transformation effort being guided by outside parties who have done this before for similar large organizations globally and we’re deliberately doing that so that we can get best practices. I think if you talk to some of the other companies that you cover around really robust transformations, they are two, two-and-a-half-year projects. And we’re not waiting until close, but this is stuff we’re going to be working on in 2027 and 2028 as well. And so, when we’re putting forward guidance in 2027, it’s incorporating any quick wins from that project, but we’re going to continue to work on it and it’s one of the big sources of margin expansion looking out into 2028 and beyond.

Trevor Reynolds — Analyst, Acumen Capital Partners

Great. That’s helpful. Thanks.

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Operator

There are no further questions at this time. I will now turn the call over to George Sipsis for closing remarks.

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

Company Ltd.

Great. Thank you, operator and thank you, everyone, for joining the call today. 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, everyone. Have a great day.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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