NAIROBI, KENYA, MAR 14 — UAP Holdings has recorded a 46.5 per cent jump in its profit for the year ended December 31, despite a tough business environment in the region.
The underwriter recorded an after tax profit of Ksh1.21 billion up from Ksh826 million the previous year, attributing the results to “the combination of improved underwriting and solid investment returns”, which culminated in a substantial increase in its profit.
This is despite a marginal drop in the value of Gross Written Premium which went down 0.5 per cent to Ksh19.29 billion, compared to Ksh19.39 billion in 2016.
Gross Earned Premium however rose 6.2 per cent to close at Ksh19.89 billion, up from Ksh18.73 billion the previous year.
Net Earned Premiums grew marginally by 0.5 per cent to Ksh15.49 billion, from Ksh15.42 billion, the company reported on Wednesday, attributing the growth to “a decision to focus on profitable revenue growth.”
“The group registered a marked improvement in business performance despite operating in a difficult environment in Kenya and the wider region,” the management noted in its financial statement.
Group CEO Peter Mwangi noted that an increase in inflation due to drought in several East African countries adversely affected the company’s customer’s disposable income.
“The security in South Sudan though improved is far from normal and the economy has contracted. Furthermore the prolonged electioneering in Kenya depressed economic activity as evidenced by data from the Kenya National Bureau of Statistics and Stanbic Bank’s PMI,” the company said.
The Nairobi Securities Exchange listed firm said its market share in key lines of business, particularly health in Kenya, slightly decreased. The health business’ Gross Written Premium reduced by 10.7 per cent.
“Nevertheless, our efforts to improve core performance yielded 4.5 per cent savings in claims and benefits payable due to improved underwriting and a reduction in loss ratios,” Mwangi said.
He said the company additionally undertook several efforts to realize cost savings including a restructuring that was concluded in March 2017.
The company’s operating expenses grew 8.2 per cent which compares favourably to the 2017 average inflation rate of 8.02 per cent in Kenya, its largest market.
The Group’s net assets closed at Ksh18.9 billion up from Ksh17.7 billion.
“The reversal of two years of bear markets for the Nairobi Securities Exchange had a notable impact on our investment income due to the appreciation of our equities portfolio,” it said.
“Furthermore, stable returns from fixed income and an increase in rental income from our investment properties contributed to a 27.9 per cent in investment income compared to the prior year,” the company added.
The board of directors has proposed a dividend of Ksh1.70 per share, to be recommended for approval by shareholders at the Annual General Meeting to be held on June 13.
Headquartered in Nairobi, UAP Holdings has subsidiaries in Tanzania, Uganda, South Sudan, Rwanda and DR Congo. It also has a subsidiary in Mauritius, where the units are holding companies for the non-Kenyan operations.