Insurance firm Sanlam Kenya narrowed its net loss to Sh287.7 million in the half year ended June on the back of a lower tax bill and reduced expenses. The company had posted a net loss of Sh291.8 million a year earlier.
Sanlam’s tax expenses collapsed to Sh2.8 million from Sh68.9 million. The company did not disclose the reason for the sharp reduction in its tax bill. Sanlam has recently revised the reserves for claims besides correcting earlier accounting errors which could have an impact on taxes payable.
The insurer’s operating and other expenses declined to Sh1.47 billion from Sh1.79 billion, helping to cut the losses.
The Nairobi Securities Exchange (NSE)-listed firm saw its net earned premiums grow 5.5 percent to Sh4.6 billion from Sh4.3 billion. Net claims meanwhile increased to Sh4.2 billion from Sh4 billion. Investment income dropped by 33.4 percent to Sh1.02 billion.
The fall of share prices on the NSE is part of the factors hurting returns for underwriters with significant exposure to the stock market.
The insurer’s South Africa-based parent firm is creating a joint venture with Allianz SE, a move that could have an impact on their local subsidiaries (Sanlam Kenya and Jubilee Allianz General Insurance Kenya).
Allianz earlier told Business Daily that it will take time to review the fate of its newly acquired local subsidiary Jubilee Allianz under its pan-African partnership with South Africa’s Sanlam Limited.
Allianz Africa regional head of mergers and acquisitions and General Counsel Nandini Wilcke said no decision has yet been reached on how to treat the new company under the 10-year joint venture that will bring together the multinationals’ interests in their local subsidiaries.
“At the moment Allianz is focused on completing the Allianz acquisition of the majority shareholdings in Tanzania and Mauritius as previously announced, as well as to continuing to strengthen the Jubilee Allianz businesses in Kenya, Uganda and Burundi,” she said recently.
“For now the focus is on business as usual. No decisions have yet been made about the Sanlam or Allianz business operations in Kenya.”
Under the 10-year deal between insurance giants Allianz SE and Sanlam Limited, the latter will own a 60 percent stake in the joint venture while Allianz will hold a 40 percent interest with an option to buy an additional nine percent ownership in the future.