Sanlam Kenya PLC says it has restructured its foreign currency-denominated loan into a local currency facility.
In a statement, the listed non-bank financial services provider says the move is geared at preserving shareholder value.
During the first six months of the year, Sanlam says it restructured US$27 million loans into a Sh3 billion facility with a local banking institution to mitigate against future forex losses occasioned by the weakening of the Kenya Shilling against the United States dollar.
The move comes at a time when the company has posted a Sh291.8 million loss, up from a Sh99.1 million loss posted in the same period last year.
The financial services provider has attributed the loss to one-off forex losses and a more prudent company stance towards provisioning as the business carefully manages its future financial outcomes in a recovery period from the onset of the covid-19 pandemic in 2020.
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During the period under review, the firm’s gross insurance revenues improved significantly for both Life and General business under the dark Covid trading cloud.
Half-year consolidated gross written premiums at Sh5.9 billion was a 38 percent improvement compared to the prior year’s Sh4.3 billion, with Sanlam General posting a 32 percent growth, while Sanlam Life posted a 44 percent growth in insurance revenues.
At the same time, investment income at Sh1.5 billion was 23 percent higher than the prior year’s Sh1.2 billion.
Net benefits and claims grew in line with the growth in insurance revenues.
Speaking, when he confirmed the firm’s trading position in Nairobi, Sanlam Kenya Plc, Group CEO Dr Patrick Tumbo said that the business continues to take a long-term view in the execution of its strategy and will build on current successes in its insurance business to grow profitably into the future.
In its 2020 annual report, the firm had disclosed the significant currency exposure on the borrowings, which stood at Sh2.976 billion at the end of the last financial year.
The loan proceeds, the disclosure confirmed, were in US$, and the loan interest payments were also in US$.
“The debt restructuring which commenced in 2020 is now complete, and it will provide much-needed relief as the forex loss risk is now mitigated going forward,” Dr Tumbo said.
He added that “At Sanlam Kenya Plc, we have also been affected by covid-19, which has accelerated life and general insurance policy claims, but we expect swift recovery as the pandemic containment measures including mass vaccinations begin to bear fruit.”
As part of its strategic business plan, said that the firm is executing a sustainable plan considering the impacts of the covid-19 pandemic on the economy and insurance industry as a whole.
He said the plan focuses on enhancing value drawn from the firm’s business digitization initiatives, including adopting e-commerce insurance products distribution and sales. He said the utilization of digital solutions would positively reduce the firm’s operating cost base while improving customer experience.
He said Sanlam Kenya has also structured several strategic partnerships, which are expected to bear benefits from the second half of the year going forward.
Earlier this year, the continental non-bank financial services provider announced that it had embarked on a brand repositioning agenda expected to take two to three years.
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The initiative, which is expected to be an expensive affair, is projected to turn around the insurer’s declining earnings.
In the year ended December 31, 2020 for instance, Sanlam Kenya recorded a loss of Sh78 million, a drop from the prior year when it reported a net profit of Sh114million.
The firm said the loss on account of negative currency movements and the impact of the Covid-19 pandemic on the value of its assets.
Part of the rebranding saw the firm inject Sh49 million into the implementation of a corporate software reboot, intended to transform the business, to become a purpose-led organization focused on giving millions of Africans the chance to live with financial confidence.
The company said the campaign would enable it to invest in the rollout and adoption of the brand tag line ‘Live with Confidence’ in the next two to three years.
