Rise in premiums and layoffs lift UAP Old Mutual profit to Sh383m

Geoffrey Kiptum, Ag. CEO & commissioner of Insurance, UAP & Old Mutual will list on African Countries Stock exchange such as Johannesburg Stock Exchange. [Wilberforce Okwiri]

Financial services firm UAP Old Mutual Investment Group has posted Sh383 million in profit after tax for the first half of 2019.

This marks 100 per cent growth from Sh190 million recorded in a similar period last year.

The company attributed the rise to steady growth in net premiums as well as cost savings on operating expenses that fell eight per cent compared to last year.

“The cost reduction was a result of payroll savings realised after the reorganisation exercise in the first half of 2018 and concerted efforts to manage expenses countrywide,” said UAP Old Mutual Group Chief Executive Peter Mwangi (pictured) in a statement.

Last year, the company laid off 89 staff in a reorganisation process that cost it Sh335 million on the back of a 61 per cent drop in after-tax profit between 2017 and 2018. The company’s net earned premiums increased marginally by three per cent from Sh7.3 billion in the first half of last year to Sh7.5 billion over a similar period this year.

Investment income, however, went down 7.7 per cent from Sh1 billion to 1.8 billion in the similar period, while net claims payable went up from Sh5.1  billion to Sh5.5 billion over the same period of time.

“The claims experience increased due to the operating environment, particularly for the medical business and additional boosts to reserves in the life business,” said Mwangi in part.

“Investment income declined by 7.7 per cent mainly due to the impact of property valuation write-downs.”