Sanlam Kenya has posted a Sh99.1 million after-tax loss down from a Sh639.6 million after-tax profit posted within the same period last year.
The firm realized a Sh136 million pre-tax loss down from a Sh937 million pre-tax profit posted within the same period the previous year.
Speaking when he released the results, Sanlam Kenya Group CEO, Dr Patrick Tumbo explained that the half-year under review was challenging to all segments of the economy and this has continued in the second half of the year.
Said Dr Tumbo: “The Coronavirus pandemic affected the supply of goods and services as well as consumption at all levels, both locally and globally. Corporate earnings were greatly affected in key segments of the economy, such as manufacturing, agriculture, transport, hospitality and financial services. The insurance industry was not spared as the knock-on effects in other segments reduced the ability of both corporates and individuals to spend on insurance. Experts have revised the economic growth projections for the Country, pointing to a possible contraction in GDP by 1 percent in the current fiscal year with recovery only expected in 2021.”
Considering the uncertainty associated with the resolution of the pandemic and severity of its economic and social impacts, Dr Tumbo confirmed that the Sanlam Kenya Board had decided to set aside additional reserves to mitigate against future shocks.
He noted that the capital markets had also been significantly affected, with the various stock indices depreciating in value over the first half of the year.
“All these elements have had a negative impact on our performance including foreign exchange losses arising from our US$ denominated credit facility,” Dr Tumbo explained.
Overall, the Group’s performance reflects the current state of the operating environment albeit with an improvement in its business fundamentals.
Gross written premium in the first half of the year improved by 17 percent compared to the previous year. Short term insurance (Sanlam General) improved by 35 percent compared to the prior year, while long term insurance (Sanlam Life) posted a 10 percent growth over the prior year.
Sanlam General and Sanlam Life posted after-tax earnings of Sh73 million and Sh229 million respectively.
Short term insurance underwriting profits as well as a profitable long-term business “in-force” book were key contributors to this.
Innovation and an enhanced customer value proposition are expected to continue supporting the group’s performance in the future.
The long and short-term insurance businesses implemented online selling while the short-term business transitioned to a paperless environment in its underwriting and claims functions. The business has also managed to onboard some of its strategic partners onto digital platforms in a co-creative process.
Cash and cash equivalents improved from Sh1.67 billion to Sh1.75 billion in the current year while solvency in the insurance subsidiaries improved compared to the same period last year, with the long-term insurance business exceeding the prescribed limits.
As part of Sanlam’s Covid-19 Response Plan the Group has set up a Crisis Management Team that monitors COVID-19 developments and has developed a response plan to ensure that Sanlam customers, staff and other stakeholders are protected. The key pillars of the plan are to ensure that the customers receive uninterrupted service, our staff and agents are safe and protected with the implementation of remote working and that the highest levels of safety precautions are upheld at our office premises countrywide.
With an improvement in the current business fundamentals on revenue, cashflows, underwriting results, and solvency at half-year, the Group is poised to weather the challenging economic environment in 2020 and post better results in 2021 and the long term.
