NAIROBI, KENYA: Local non-bank financial solutions provider Sanlam Kenya has reiterated plans to step up its innovation function to mitigate the impact of Covid-19 on its business.
In its half-year trading results released on Thursday, the Nairobi Securities Exchange (NSE) listed firm, 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 per cent in the current fiscal year with recovery only expected in 2021.”
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Considering the uncertainty associated with the resolution of the pandemic and the 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 over the first half of the year. “All these elements have hurt our performance including foreign exchange losses arising from our US dollar-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 per cent compared to the previous year. Short term insurance (Sanlam General) improved by 35 per cent compared to the prior year, while long term insurance (Sanlam Life) posted a 10 per cent 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.