A slow property market cost Sanlam Kenya heavily as recorded a Sh129 million loss in the first six months of the year compared to a net profit of Sh284 million in the same period last year.
The firm, formerly Pan Africa Insurance Holdings, saw its property (under other income) sales decline sharply to merely Sh40 million in the first six months of the year from Sh641.9 million in the same period last year.
In a statement announcing the results, the company attributed the loss to lower income to property sales and fair-value losses of some of its assets. Total expenses also rose during the period.
“Income from property sales declined significantly due to a reduction in the number of plots sold,” the company said in the statement signed by its chairman John Simba and chief executive Mugo Kibati.
Gross premiums declined by five per cent to Sh2.4 billion as compared to the same half-year period in 2015. The premium income growth was hampered partly by competitive pricing in corporate business.
Investment portfolio earnings increased by 98 per cent to Sh1.2 billion in the first half of the year supported by returns on interest-bearing investments.
The insurance industry has been complaining for years that there is cut-throat competition that in many cases involves undercutting in prices.
Sanlam Kenya said that it had adopted a new five-year strategy that involves, among other things rebranding and changes to its distribution channel in the life insurance business.
“The benefits of these investments have started to bear fruit … but will require more time to have a more significant impact on the performance of the life business. Full realisation of the benefits are expected in 2017 with a marked improvement in overall growth,” said the firm.