Sanlam Kenya has declared a loss of $2.66 million (KSh291.86 million) in the first half of 2021 in its recent financial results.
The loss was spurred by COVID-19-induced disruptions, which exposed multiple lines of insurance assets and investments to emerging risks and uncertainty in the insurance industry.
Compared with the previous year, Sanlam Kenya’s loss surged by 194.4 percent from KSh291.86 million ($2.66 million) in the first half of last year to KSh99.14 million ($4.9 million) at the end of the first half of 2021.
The Patrick Tumbo-led insurance group posted a 38.5-percent increase in its gross written premium. However, faster growth of 40 percent in its total expenses pressured the insurer’s earnings to a loss of $2.66 million (KSh291.86 million).
Sanlam Kenya is an insurance, investment and retirement group based in Nairobi, Kenya.
The company operates as a member of the Sanlam Group, a South African financial services group with interests in Africa, Europe, India, the United States, Australia and Southeast Asia.
Sanlam Kenya became the first insurance company to list on the Nairobi Stock Exchange in 1963. Since then, it has grown its assets base into a 33-billion shilling ($301.3 million) valuation in recent times.
The $2.66-million (KSh291.86 million) loss that the group reported in the first half of 2021 made it the second time in a row it would post a loss in the first half of its financial year.
The weak performance can be attributed to a once-off forex loss, which it incurred due to foreign exchange risk exposure.
The risk exposure made the insurer restructure its Ksh2.95-million ($27 million) foreign currency-denominated loan into a Ksh3-billion ($27.4 million) facility with a local banking institution.
The decision was made to mitigate against future forex losses occasioned by the weakening of the Kenya shilling against the U.S. dollar.
Sanlam’s weak performance can also be attributed to a 65-percent increase in net claims and policyholder benefits and a KSh68.9-million ($630,000) tax that it reported payable to tax authorities.
As of press time, 2:15 PM (UTC), Aug. 20, shares in the group were worth KSh11.90 ($0.1086), 5.31-percent higher than its opening price of KSh11.30 ($0.1032) this morning on the Nairobi-bourse.
Tumbo, who became the group’s CEO in 2018, has played a vital role in taking the insurance group out of a Ksh2.13-billion ($19.44 million) loss in 2018 into profitability in 2019 and 2020.
Under him, the group’s total asset base increased from a valuation of Ksh29 billion ($264.74 million) in 2018 to Ksh33 billion ($301.3 million) in 2020.
