Sanlam books Sh639m profit after shock loss

Profits were also supported by lower claims at Sh1.9 billion, down from Sh2.4 billion. FILE PHOTO | NMG 

In Summary

• Insurer vows to keep off corporate bonds after taking a beating last year.

By OTIATO GUGUYU
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Listed insurer Sanlam Kenya has posted Sh639 million in net earnings for the first half of 2019, coming from a Sh1.5 billion loss booked in the same period last year due to bad investment decisions.

The firm now says its treasury bond and equity portfolio swelled earnings from Sh41 million to Sh1.9 billion to prop insurance incomes which grew slightly from Sh2.4 billion to Sh2.7 billion.

Profits were also supported by lower claims at Sh1.9 billion, down from Sh2.4 billion.

“Investments on the other hand reported impressive market value gains on Sanlam’s equity and treasury bond portfolios raising the non-insurance incomes to Sh1.9 billion compared to Sh41 million over the same period last year,” Sanlam Kenya group chief executive officer Patrick Tumbo said.

Last year Sanlam took a beating when it wrote off bonds owed by Kaluworks (Sh169 million), Sh574 million by Athi River Mining (ARM) Cement, and Sh398 million by Real People Kenya. It had also extended money to troubled Nakumatt Supermarkets.

The firm said it has stepped up efforts to recover the cash that totals to Sh2.2 billion.

“Efforts to recover the Group’s impaired assets amounting to more than Sh2.2 billion from institutions under financial distress, are still ongoing and remain a top priority for the business this year,” Mr Tumbo said.

Sanlam vowed to keep off corporate bonds considered “highly toxic” investments and instead move to government infrastructure bonds until the law governing the corporate bond market is strengthened.

Sanlam grew its core insurance revenues by 17 percent to Sh3.65 billion up from Sh3.11 billion reported over the same period last year, also attributed to an improved investment performance and the positive impact of a revision in the statutory interest rate risk margin.

The Group’s total income derived from net earned premiums, investment and miscellaneous income improved by 84 per cent to Sh4.6 billion from Sh2.5 billion last year.