Sanlam Kenya has announced a Sh317 million full year 2016 pre-tax profit jump up from Sh54 million posted the previous year.
The Nairobi Securities Exchange (NSE) Listed non-bank financial services provider confirmed that the profit before tax jump is largely attributable to improved performance by the firm’s General Insurance Business-Sanlam General Insurance- which has managed to book a 95 per cent reduction in its underwriting loss in line with growth in top line and prudent reserving.
This year, Sanlam Kenya is proposing to retain dividends payable as it seeks to build its capital reserves to ensure full compliance with the new Risk Based Capital and regulatory regime.
Speaking at an Investor and media Briefing session hosted by the firm, Sanlam Kenya Group CEO Mr Mugo Kibati said the firm’s performance had been affected by a number of market challenges experienced within the year under review. Some of these challenges, included a depressed performance of the stock market, changes in the life business valuation and developments in the local banking sector.
The firm, he said, had however managed to weather some of the challenges with significant growth from its General Insurance and Asset Management businesses even as the Life Business suffered slower growth last year.
Accompanied by Sanlam Kenya Group Chairman Dr John Simba, Mr Kibati reiterated that the firm’s recent profit withdrawal notice had been necessitated by a reduction in the level of impairment provisions; earlier considered for some of the firm’s investments in Chase Bank (In-Receivership).
At Sanlam General Insurance, Kibati said the firm’s concerted engagement efforts with customers and business partners had allowed the firm to grow its gross written premium by 58 per cent to Sh1 billion up from KShs. 633m achieved in 2015. The firm which was one of the first to market with a Marine Cargo Insurance (MCI) product has registered a marked improvement in its first full year in the group, managing to reduce its operating loss before tax by 92 per cent to Sh24 million down from Sh302 million loss reported in 2015.
The Sanlam General Insurance business transformation program which commenced two years ago, Kibati noted, has started to bear fruit with significant improvements now realized. The firm’s operating loss before tax reduced by 92 per cent to Sh24 million from Sh302 million loss reported the previous year, effectively setting the firm on a profit course this year.
Policyholder benefits and claims at Sanlam General Insurance, Kibati said had decreased by 75 per cent from Sh538 million to Sh135 million driven by the strategic decision to discontinue the underwriting of the Public Service Vehicles (PSV) line of business as well as improved non-motor business.
“The group achieved numerous milestones despite a difficult year. Going forward, we will keep investing in our operational capacity to better serve our target customer needs and fully exploit existing and emerging growth opportunities,” Kibati assured.
At Sanlam Investments, the Operating Profit increased from Sh24 million posted the previous year to stand at Sh46 million in a move attributable to the growth in revenues. The growth, Kibati explained has remained consistent to the firm’s growth in its Assets Under Management (AUMs) as well as enhanced cost efficiency.
Fee income from Sanlam Investment also jumped 31% to KShs. 156m up from KShs.119m on account of satisfactory growth in assets under management and performance fees earned based on significant outperformance of its prudent investment benchmarks.
Sanlam Kenya’s Life business subsidiary Sanlam Life Insurance, returned a slower premium income growth due to market pressures affecting its performance on the corporate and retail segments.
The firm, Kibati assured has already embarked on strategic business recovery efforts to jump start growth for the life business. Already, significant changes have been undertaken to streamline Sanlam Life Insurance’s distribution channels.
Last year, Sanlam Life Insurance posted a five percent Gross written premium drop to Sh4.4 billion down from Sh4.6 billion achieved in 2015 even as its Investment portfolio earnings increased by 50 per cent from Sh1.4 billion in 2015 to Sh2.1 billion in 2016 driven by good investment return from the interest bearing exposure. Policyholder benefits increased from Sh4 billion to Sh4.3 billion attributable to maturities as well as an increase in annuity payments following strong new annuity business sales.
This year, Sanlam Kenya will be seeking to enhance its shareholder value through a sustained focus on excellent customer service, investments in growth sectors and disciplined market execution to boost revenues.
The company, will also be maintaining its focus on the implementation of its robust five-year growth strategy. The strategy last year was headlined by a strategic rebranding process with all the former Pan Africa Insurance Holdings subsidiaries adopting a single identity under the Sanlam brand.
In Africa, the Sanlam Group continues to enjoy pride of place as the single largest non-bank financial services provider with interests in life, general insurance and wealth management solutions among others.
Locally, the group is making steady progress with the implementation of its new five-year strategy. Beyond the rebranding programme, the new strategy has also seen a significant transformation for the firm’s life and general insurance business distribution channels, as well as investment in capacity to support accelerated future growth.