Turmoil is attributed to lower revenues in the stocks market, real estate slowdown and revenue dip from investing in State against higher claims
Last year was a tough period for insurance and investment companies which saw their operations suffer huge losses estimated at billions of shillings.
This was attributed to lower revenues in the stocks market, real estate slowdown and lower revenues from investment in government securities. The situation was made worse by rising claim costs in the review period.
During 2018, the equities market was on a downward trend with the All Share Index NASI down 18 per cent, the NSE 25 was down 17.1 per cent and the benchmark NSE 20 dropped by 23 per cent. Also, earnings from fixed incomes remained depressed.
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Investment firm Britam Holdings which posted a Sh2.2 billion loss in 2018, up from a profit of Sh527 million in 2017 blamed the decline on a 10 per cent occupancy of Britam towers and decline in performance at the NSE.
Kenya Reinsurance blamed lower valuations on their real estate property as occupancy was hit hard.
It also experienced decline earnings from its subsidiaries. According to its report, business at ZepRe suffered forex losses in South Sudan to see net profit decline by 36 per cent, from Sh3.5 billion in 2017 to Sh2.2 billion in the 12 months to December last year.
Liberty Kenya Holdings saw after-tax earnings decline nine per cent from Sh674 million in 2017 to Sh608 million last year, blaming the decline on stunted premium growth in Kenya and Tanzania.
“The third quarter Insurance Regulatory Authority statistics indicated that the insurance industry in Kenya grew by only 1.7 per cent, while in the half-year report by Tanzania Insurance Regulatory Authority indicated a premium growth of 3.9 per cent,” Liberty Holdings said.
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Britam Group Managing Director Benson Wairegi said the 2018 performance is largely attributable to the poor performance in the stock market.
The group reported unrealised loss from investment in listed equities of Sh3.2 billion compared to a gain of Sh0.9 billion recorded in 2017.
The firm’s costs were also pushed up by reorganising staff after 110 workers left the company under the voluntary early retirement. “This saw Britam pay them Sh600 million in the one-off costs,” noted Wairegi.
A loss of Sh594 also hit the investment firm on a re-evaluation of its financial assets.
Old Mutual Investment Group posted a profit of Sh57 million, Old Mutual Investment Services posted a profit of Sh19 million, but Old Mutual securities booked a net loss of Sh32 million.
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Under the Old Mutual Unit Trust, the money market fund made Sh320 million, while the equity fund posted a loss of Sh87 million.
The East African Fund made a loss of Sh1.2 million and the bond fund posted a profit of Sh2 million.
For investment firm Sanlam, a sharp decline in business, bad loans and revising the amounts to be set aside to pay future claims sunk it into a Sh1.97 billion loss for the period. Sanlam lost Sh1.1 billion in long-term investments in bonds that went sour including debt notes and equity in Kaluworks, Real people and Athi River Mining.
The group said Sh650 million in earnings was also shaved off from actuarial adjustment on reserving basis even as the industry performed was below par.
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