Companies

Liberty earns Sh500m from properties

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Liberty Life Insurance Kenya Managing Director Abel Munda. FILE PHOTO | NMG

Insurance firm Liberty Kenya Holdings last year disposed of investment property worth Sh500.6 million, shoring up income that was negatively hit by the downturn in the stock market and rising insurance claims.

South Africa’s largest lender Standard Bank Group, which is Liberty Kenya’s ultimate parent firm, disclosed the details of the sale in a trading update for the year ended December 2022.

Liberty had earlier disclosed an intention to sell part of its investment property, singling out two residential properties which were previously being leased out earning an annual rental income of Sh13 million.

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By the end of 2021, Liberty said, investment properties held for sale were valued at Sh633.3 million, out of which Sh508 million worth of property was being actively marketed, while the remaining value was awaiting satisfaction of certain precedent conditions.

“Certain investment properties in Kenya amounting to R71 million (Sh500.6 million) that were classified as held for sale on December 31, 2021, have subsequently been sold at the measured value. One property measured at R16 million (Sh112.8 million) remains classified as non-current assets held for sale,” said Standard Bank in its financials.

Liberty Kenya is yet to release its full-year financial results for the year to December 2022. The company reported a sharp drop in net earnings in 2021 to Sh81.83 million from Sh675.95 million in 2020, citing the impact of the Covid-19 pandemic and higher claims on the insurance business.

Therefore, the 2022 disposal of the property will likely have a positive impact on its bottom line, negating some of the impacts of diminished returns from equities investments and rising insurance claims.

Standard Bank noted that the financial performance of Liberty Africa’s insurance business was impacted by weaker investment markets, “mainly in Kenya, and higher levels of short and long-term business claims in the Kenya businesses.”

In the past year, the Nairobi Securities Exchange (NSE) has been in the grip of a bearish run that has mirrored the negative runs of emerging and frontier equities markets, which have been hit by capital flight back to the US and its rising interest rates.

The stock market shed Sh606 billion in investor wealth in 2022 and has since the beginning of this year shed another Sh149 billion in market capitalisation on the back of continuing foreign investor selloffs.

Insurers are among the more exposed entities in the stock market, given their large investment portfolios in the financial markets.

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Other than equities, they have —like banks— been recording an erosion in the fair value of their bond investments due to a fall in prices as yields rise in the secondary market.

These losses are however not realised unless the holders sell these securities.

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