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Thursday, May 19, 2022
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The company has attributed the performance to strong topline growth and investment income performance/UAP

UAP Old Mutual Returns to Profitability in the first half of 2021

The company has attributed the performance to strong topline growth and investment income performance

by Wanjiku Njugunah
September 1, 2021
in Africa, Kenya
0
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Regional insurer UAP Old Mutual Group has recorded a profit before tax of Sh552 million in the first half of the year, compared to a loss of Sh57 million for the same period in 2020.

The company has attributed the performance to strong topline growth and investment income performance on the back of the recovery of the Nairobi Securities Exchange during the period.

Excluding the impact of the Old Mutual Life Assurance Company (OMLAC) consolidation, the Group recorded a profit before tax of Sh518 million.

Commenting on the report, Arthur Oginga, Group CEO noted that the performance of the business in the period was delivered on the backdrop of the initial stages of the expected economic recovery as the different countries they operate in work towards a return to normalcy while managing the risks of subsequent waves of the Covid-19 pandemic.

“In our core Kenya market, we have seen positive results in the NSE indices and economic data as at H1 2021 which speaks to the initial stages of the recovery. The highlights for our business in this period include strong topline growth, return to profitability and positive cash flow generation from operations,” Odinga said.

The firm has also resolved to sell all the shares of the Company to UAP Life Assurance Limited (UAPAL) in exchange for shares in UAPAL.

This resulted in UAP Holdings Plc continuing to exercise control, although its shareholding in UAPAL will reduce from 100% to 55.7% with the remaining 44.3% being held by Old Mutual Holdings Limited.

https://theexchange.africa/africa/as-africa-turns-on-more-iot-devices-a-million-attacks-abound/

Odinga said the consolidation of the two life companies is part of the company’s corporate structure simplification and the UAPH results as of H1 2021 is the first set of consolidated results that include OMLAC.

Performance

During the period under review, gross written premiums were up 33 percent, driven by both the short-term insurance and long-term insurance businesses.

“The long-term insurance business experienced a recovery compared to prior year driven by strong corporate sales while the short-term insurance business has sustained the strong growth recorded in 2020,” the company said.

Net earned premiums were up 17% over the same period in 2020 in line with Gross earned premiums which were up 22%. Excluding the results of OMLAC, on a like for like basis, gross written premiums were up 26%, gross earned premiums were up 14% and Net earned premiums were up 8%.

Investment income was up 121% driven by the recovery in the Kenya equities market. The NSE All-Share, NSE 25, and NSE 20 indices were up 14%, 10% and 3% respectively in H1 2021 compared to down 17%, 22% and 27% in H1 2020 on the back of the economic impact of the measures imposed to contain the pandemic.

Excluding the impact of the Old Mutual Life Assurance Company consolidation, investment income was up 90%.

Net claims payable was up 48% driven partly by increased medical claims relating to Covid cases and hardening of reinsurance terms in 2021 that has led to reduced reinsurance recoveries.

https://theexchange.africa/countries/uap-old-mutual-see-rise-in-sales-over-festivities/

Excluding the impact of the OMLAC first time consolidation, net claims payable was up 30%.

The Group has continued engaging with customers who have been impacted by the pandemic and supported them in receiving appropriate care to recover.

Operating expenses were up 2% over H1 2020. Costs have remained well contained driven by operational efficiencies on the back of the technology investments we have been making in recent years.

Excluding the impact of the OMLAC consolidation operating expenses were down 8%.

www.theexchange.africa
The firm has also resolved to sell all the shares of the Company to UAP Life Assurance Limited (UAPAL) in exchange for shares in UAPAL/ COURTESY

Interest costs on borrowings were down 8% on HY 2020 driven by forex losses on the dollar-denominated debt in the previous year.

The company says it refinanced its dollar-denominated debt in the second half of 2020 and as such eliminated the forex mismatch risk.

Odinga added that the company’s strategy is focused on delivering an integrated financial service offering for their customers by leveraging the solutions provided within their individual lines of businesses to deliver on a one-stop solution.

“This will drive improved productivity in the individual businesses and consequently the whole Group.”

Tags: FeaturedKenyaUAP HoldingsUAP Old Mutual

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Wanjiku Njugunah

Wanjiku Njuguna is a Kenyan-based business reporter with experience of more than eight years.

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