Pan Africa Insurance has announced a three-fold increase in its half-year net earnings for 2012, following gains at the Nairobi Securities Exchange (NSE) and bond revaluations. File
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The firm posted Sh218 million profit after tax in the six months to June, compared to Sh72.9 million for the same period last year.
Stock prices have been on an upward trend since the start of the year, with the NSE share index up by more than 15 per cent, pushing up the value of old investments at the bourse.
Pan Africa’s fair value losses of Sh144 million in June last year have now reversed to gains of Sh440 million.
Pan Africa reported a 75 per cent increase in gross premiums attributing it to growth in corporate business. The insurer’s average premium, however, dropped 22 per cent due to the high cost of living witnessed in the first half of the year that affected clients’ disposable income.
The company has diversified into real estate and last year reported a Sh664 million income from sale of houses in Runda.
Pan Africa Insurance has announced a three-fold increase in its half-year net earnings for 2012, following gains at the Nairobi Securities Exchange (NSE) and bond revaluations.
The firm posted Sh218 million profit after tax in the six months to June, compared to Sh72.9 million for the same period last year. “This is attributable to a strong growth in premium income as well as an improvement in the fair value of our equities and bond portfolios following the general improvement in economic factors,” said the company in a statement.
Stock prices have been on an upward trend since the start of the year, with the NSE share index up by more than 15 per cent, pushing up the value of old investments at the bourse.
A drop in interest rates has also seen the value (price) of bonds held by institutions rise sharply owing to the inverse relationship between interest rates and bond value.
Pan Africa’s fair value losses of Sh144 million in June last year have now reversed to gains of Sh440 million.
“Generally, insurance companies should be doing well because of the investment income and growth in the underlying business,” said Eric Musau, an analyst with Standard Investment Bank.
Pan Africa reported a 75 per cent increase in gross premiums attributing it to growth in corporate business. The insurer’s average premium, however, dropped 22 per cent due to the high cost of living witnessed in the first half of the year that affected clients’ disposable income.
Pan Africa’s performance was also buoyed by the sale of its two plots in Runda, Nairobi. The insurer expects to dispose of another 17 plots before the end of the year.
The company has diversified into real estate and last year reported a Sh664 million income from sale of houses in Runda.
“The infrastructural development of Runda Phase Two project is now complete and we expect to complete plot sales by December,” said the management.
“Profits in 2011 were from the sale of houses... and will therefore not be repeated.” Insurance companies including UAP, British American, and Jubilee have been diversifying their investment from equities and government securities to shield themselves from the volatility of those markets.
Pan Africa Group is a member of the South African-based Sanlam Group which has announced plans to increase its shareholding in the insurer to 60 per cent from the previous 50 per cent.
