Sanlam posts loss for fourth straight year

Sanlam House on Kenyatta Avenue in Nairobi.  

Photo credit: File | Nation Media Group

Sanlam Kenya net loss for the financial year ended December 2023 widened by 52.6 percent to Sh126.6 million on reduced investment income and increased spending on paying debts, keeping investors without a dividend for a decade.

The insurer’s net loss increased from Sh82.9 million posted in the previous year, in what marks the fourth straight year in losses. The last net profit came in 2019 when it closed the year with Sh114.4 million net earnings.

The latest loss was despite Sanlam General Insurance and Sanlam Life Insurance—the two business units for short-term and long-term insurance business, respectively— returning a profit.

The group’s loss position was driven by a 48.1 percent fall in investment return to Sh1.06 billion from Sh2.04 billion and a 32.8 percent increase in finance costs to Sh604.6 million. Accumulated losses for the group have now hit Sh2.29 billion from the previous year’s Sh1.99 billion.

The group in May 2022 received a Sh1.08 billion loan from the ultimate parent company, Sanlam Emerging Markets, to bridge its capital shortfall.

Group borrowings hit Sh4.67 billion last year from Sh4.09 billion in 2022.

Sanlam shareholders will for the 10th straight year go without dividends in light of the latest loss. The insurer’s last dividend came in 2013 at Sh4.50 per share amounting to a total of Sh432 million as net earnings hit Sh1.25 billion. “The board of directors does not recommend the payment of dividend for the financial year ended December 2023,” said the board in a commentary on the results.

The insurer’s South Africa-based parent firm, Sanlam, announced in May 2022 it will be creating a joint venture with Allianz SE.

Sanlam shareholders have also seen the value of their Sanlam shares on the Nairobi Securities Exchange-listed firm decline over the years, from Sh8.64 billion in 2013 to the current valuation of Sh950.4 million.

Net profit in the subsidiary Sanlam Life, which handles products such as life assurance and annuities, rose to Sh533.9 million last year from Sh463.9 million in the preceding similar period, helped by increased income from the insurance business. This was despite investment income falling 56 percent to Sh801.4 million.

Sanlam General, which handles short-term business such as medical and motor vehicle insurance, posted a Sh122.72 million net profit, emerging from a Sh36.4 million net loss posted in the previous period.

The insurer’s South Africa-based parent firm, Sanlam, announced in May 2022 it will be 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.

The two firms announced in May last year they had received regulatory approvals for the joint venture that will create the Pan-African non-banking financial services company with a presence in 27 countries in Africa.

Allianz and Sanlam said the joint venture is expected to have a combined group equity value of approximately R35 billion (Sh245 billion), giving customers a broader offering of insurance products tailored to their needs.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.