Setting the record straight |10 February 2021
The board of Sacos feels duty bound to refute and address the allegations made on Sacos in page 02 of The Independent Seychelles newspaper on February 8, 2021.
Before we address the specific allegations, we wish to give some context as to how SACOS Group Limited (“Sacos Group”) has evolved over the past few years.
Certain members of the present SACOS Group Board have been in place since 2015 until now, the period to which we will refer to as the 'transition period'. Going back further, Sacos Group Limited (previously named State Assurance Corporation) was founded in 1980 and was a state-owned enterprise for many years until it listed on the Seychelles Securities Exchange in August 2013. Upon listing, shares were distributed to all the beneficiaries and certain strategic shareholders, and the Government continued to sell down its shareholding up until 2015, which resulted in it no longer having a direct stake but rather owning an indirect stake of 20.65% through the Seychelles Pension Fund. So, it is therefore imperative for all to know that contrary to popular public perception, SACOS has been and is a private sector company for some years now.
Until its listing, and during the years subsequent to the listing, SACOS Group has continued to live with the legacy of its past management, and we would rather not comment on matters relating to that era. Instead, we would rather focus on the present efforts to ensure that the interests of both the SACOS Group shareholders and the SACOS Life Assurance Company Ltd (“Sacos Life”) policyholders are being looked after. In this spirit, we will now attempt to address each of the allegations individually, in as brief a manner as possible.
- The headline: "SACOS is stealing from the poor to give to the rich"
If we must have an image for this action, which is "Robin Hood in reverse", the role of an insurance company in general, and a Life Assurance company in particular, is to neutralize risk for the benefit of all. SACOS Life receives money in the form of premiums and pays out in the form of compensation when entitled, or upon maturity. Shareholders in SACOS Group take the risk and receive a Life management fee. Unlike many other insurance companies in Seychelles, SACOS Group has in excess of 6,000 shareholders who in many cases are also policyholders, so the general public benefits both as shareholders and policyholders. The headline therefore is nothing more than clickbait.
- “.. trustees are in direct conflict of interest to the Life Fund for the benefit of the SACOS Group shareholders”.
Trustees are appointed by SACOS Group Shareholders and SACOS Group benefits when SACOS Life performs well. So again, contrary to the statement, SACOS Group shareholders along with SACOS Life policyholders all benefit from the improved management and performance of the Life Fund. There is simply no conflict of interest as suggested, rather an alignment of interests.
- “... the 2019 AGM is long overdue; it should have been held in July 2020”.
Sacos Group Ltd AGM has nothing to do with Sacos Life. In the spirit of transparency, kindly be informed that the 2018 AGM was held in August 2019 and the 2019 AGM would have normally taken place in November 2020, 15 months later in accordance with s.119 (1) of the Companies Act 2020. However, Sacos AGMs usually attract between 100-150 participants and the Public Health Orders prevented groupings at the time. We referred to the Registrar who then gave the go-ahead for a virtual AGM. The insinuation that we intentionally delayed the AGM is incorrect, we were simply weighing up the options in light of restrictions relating to large gatherings.
- The facts surrounding the amalgamation of SACOS Insurance Company Ltd and Sun Investment (Seychelles) Ltd into Sacos Group Ltd.
On listing in 2013, one of the most significant errors of past management was to list the wrong company. It took the present board four years of diligent, complex legal and administrative work, together with the regulators, lawyers and with the Exchange authorities, to correct this major mistake of the past. In an Extraordinary General Meeting (EGM) held on the 28 April 2017, following approval of the Financial Services Authority (FSA) on the 11 April 2017, all shareholders had been given the opportunity to express their views on the proposed amalgamation. Approval was given by the shareholders at that EGM, to pass the special resolution presented by the board to amalgamate Sun Investment (Seychelles) Ltd and Sacos Insurance Company Ltd into Sacos Group Ltd. Today, SACOS Group Limited is the sole operating company while the Life Assurance company belongs to the Life policyholders and is managed by the SACOS Board of Trustees. All previous subsidiaries such as Sun Investments and SACOS Insurance Company Ltd have been liquidated, and their past deeds buried. Had the current board not done this, SACOS Group (and subsequently Sacos Insurance Company Ltd through the amalgamation) would not have benefitted from the reduced business tax environment for listed companies. We don't understand why the newspaper has questioned this process and even suggested that it be challenged, since it benefits all SACOS stakeholders as well as allowing us to rid ourselves of legacy issues and avoid any ongoing legal liabilities from actions taken by previous management in these subsidiaries.
- Clarifying the Preference Share loan to SACOS Life.
When the present board undertook its “cleaning of the stables” it became apparent that the Life Assurance company had been made to acquire underperforming assets at inflated prices. As a consequence, the actuaries who supervise the activities of insurance companies, requested a financial restructuring whereby SACOS Group funded the SACOS Life Assurance’s shortfall. In fact, the SACOS Group shareholders essentially underwrote the risk of Life when in fact it was not in its financial interest to do so. This is mending errors of the past, not misappropriating funds as was suggested.
- “... in the spirit of transparency and accountability to see the breakdown of the (Life) Fund and its movements in investments...”; and “... Loan free properties were disposed of by the Board of Trustees, among these properties were some generating large cash flows...”; and “... The record shows that Life policy holders have been short-changed over time...”
All of the above statements can be addressed as follows. The present board on taking over in 2015, carried out an audit and an inventory of the entire investment portfolio of SACOS Life, including all financial and property assets. This was essential as it became apparent, not only that certain properties had been mistakenly attributed to one company or another, but that certain title deeds and records were missing altogether. Certain assets turned out to be liabilities rather than assets and required the board to implement a coordinated strategy of disposals and restructuring. As a result, the board compiled transparent and comprehensive investment policies, approved by the independent actuaries, ensuring that such past failures could not be repeated. SACOS Group & SACOS Life today have secure investment portfolios, which help them to underwrite their insurance liabilities (in the case of Group) and secure the interests of maturing policies (for SACOS Life).
Bonus rates vary from year to year depending on the performance of the Life Fund. The performance of the Life Fund is influenced by many variables, such as total number of policies participating in the fund, investment returns and actuarial liabilities. The bonuses for the “with profit” life policies are declared on an annual basis following actuarial recommendations. In 2016, Sacos Life undertook a re-evaluation exercise on its properties. As a result of this reclassification of assets and their associated fair value adjustments, Sacos Life declared a bonus rate of 0% for that year. However, in order to provide a bonus rate that satisfies the policyholders’ Reasonable Expectations, Sacos Life took the decision to set up a Bonus Stability Reserve (BSR) as at 31 December 2017. The objective of having a BSR is to assist Sacos Life in declaring bonus levels every year even during periods where there is short term adverse fluctuation in the Life Fund performance. Following the establishment of the BSR in 2017, Sacos Life has been able to declare a growing bonus rate thereafter.
- “... properties in question were sold for far less than the buying prices to close friends and associates; deliberately evaluated for less than they were bought for to justify the giveaway selling prices”.
In the course of this essential restructuring, certain assets were effectively sold below their historical price due to the fact that previous management had severely overvalued them. However, some assets were sold at a significant profit and overall, the SACOS Group & Life portfolios were re-shaped to secure the blend of risk and return for the shareholders and policyholders respectively.
- “...They moved from Sacos Tower, which belongs to the company to go and pay over one million+ rent per month. It is believed that SCR27 million rupees were given to a director just for the purchase of fittings and fixtures”.
Moving out of SACOS Tower, which the company had occupied since 2006, enabled the Group to move to a cutting-edge premises in a centrally located property with modern, customer friendly floor space that represented the new SACOS brand, much enhancing the company image and customer experience. SACOS Tower remains an asset of SACOS Life and is currently securely rented at reasonable returns. The number suggested in the article does not correlate to any of the above nor was it given to any Director as submitted, which would be tantamount to misappropriation of funds.
To conclude, we wish to point out that all of the questions raised in the article have been addressed several times over in the past five years during AGMs and other shareholder meetings. They all seem to emanate from a group of people directly connected to the ex-employees of the SACOS Group and are indicative of bad intentions.
We wish to reassure not only our SACOS Life policyholders but all SACOS shareholders that the level of corporate governance achieved over the past six years is outstanding. The allegations made in the article refer to a period prior to the transition period mentioned above and which we referred to many times in the company's annual reports as serious legacy issues resulting from previous mismanagement.
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For and on behalf of the board of directors