Sanlam 2019 results show firm likely to swim out of troubled waters

Sanlam Kenya Group CEO Dr Patrick Tumbo.

Financial services firm Sanlam is near to realising the full effect of its costly turnaround strategy after the firm crawled back into profitability.

The results for the year ended December 2019 show that the firm is promising to get out of troubled waters after profit for the year reached Sh114.4 million from a Sh1.98 billion loss realised in 2018.  

"The improved performance reflects progress made by the group’s insurance subsidiaries. Total income at Sh8.9 billion was a 50 per cent improvement compared to the previous year's .... Gross premium income improved by 10 per cent... while investment performance improved to Sh2.7 billion,” said Sanlam in a statement published in the dailies yesterday.

This is even as the company’s results for the six months of 2019 had shown investors signs of a major rebound after it booked a profit after tax of Sh639.7 million.

Rebound then was attributed to, among other factors, an improved investment performance in core insurance where revenues grew by 17 per cent to Sh3.65 billion in first half last year up from Sh3.11 billion reported over the same period in 2018.

However, reports indicate that in 2017, the company suffered the pain of writing off some Sh1.15 billion related the defunct Chase Bank and Imperial Bank bonds that became eventually irredeemable.

Other struggling firms that had reportedly failed to meet their obligations to Sanlam include Athi River Mining which had gone into receivership before it was bought by Devki. Real People sought in late 2018 an extension to settle its debt.

Chandaria family owned Kaluworks was in the news early last year for being at the mercy of  auctioneers over non-payment of multiple debts worth an estimated Sh6 billion.

Other than Sanlam Kenya, the aluminium products manufacturer was indebted to among other lenders, I&M Bank, which had since published notices for auction of the company's assets.

Sustained financial woes reportedly pushed Sanlam to an aggressive cost-cutting strategies including layoffs through a Voluntary Early Retirement (VER) scheme affecting employees over 50 years.

Sanlam Kenya Chief Executive Patrick Tumbo (pictured) yesterday said the firm retains a positive outlook for the current financial year as revenues and earnings from the group’s insurance business are expected to improve.

Tumbo said investment returns are expected to reflect positive results from improved asset management.

“At Sanlam Kenya, we have been pursuing our earlier announced strategy that focused on cost-containment and aggressively growing our revenue base in the short and medium-term. The full-year results reflect the success of this strategy and provide a good foundation for sustained growth,” he said.  

Tumbo further said ongoing stakeholder partnerships, product and process innovations in 2020 will translate into a better outcome.