Sanlam Kenya CEO Patrick Tumbo. SALATON NJAU PHOTO | NMG
Summary
- GCR said the group’s risk adjusted capital has been on a downward trend over the past three years citing a significant reduction in the capital base from Sh4.1 billion in the financial year 2017 to Sh1.7 billion in the financial year 2019.
- GCR, however, said Sanlam Life Kenya’s asset liability matching is considered "fairly sound", supported by recent disposals of investment properties and placement of proceeds in government securities.
Global Credit Ratings (GCR) has downgraded Sanlam Life Insurance Limited’s national scale financial strength rating to A(KE), from AA-(KE), with the insurer's outlook maintained as "Negative".
GCR said Sanlam Life Kenya’s national scale financial strength rating reflects the credit profile of Sanlam Kenya Plc its parent firm, which has "exhibited sustained weakness in risk adjusted capitalisation" leading to the rating downgrade.
"While, Sanlam Life Kenya registered strong statutory solvency of 168 per cent at financial year 2019 and showed further improvement to 217 per cent at first half of the financial year 2020, largely backed by capital of Sh643 million injected in the financial year 2018, sale of investment properties and a review year increase in retained earnings, the group’s risk adjusted capitalisation measured at a depressed level," said Global Credit Ratings.
"This was due to the partial execution of the capitalisation plan presented by management failing to substantially lift group capital adequacy to rating adequate levels."
GCR said the group’s risk adjusted capital has been on a downward trend over the past three years citing a significant reduction in the capital base from Sh4.1 billion in the financial year 2017 to Sh1.7 billion in the financial year 2019.
GCR, however, said Sanlam Life Kenya’s asset liability matching is considered "fairly sound", supported by recent disposals of investment properties and placement of proceeds in government securities.
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