Volatility in the stock market has had a major impact on the financial performance of insurers whose fortunes rise and fall with the market.
Pan Africa Holdings’ net profit for the first half of the year has dropped 51.1 per cent to Sh390.7 million, as weak performance of the insurance group’s portfolio at the stock market hit earnings.
Pan Africa’s gains on its investments at the Nairobi Securities Exchange (NSE) fell 73.8 per cent to Sh186.4 million from Sh713.5 million in the first six months of last year. The NSE 20-Share Index shrunk one per cent to 4,885 points in the same period to end of June, compared to 4,927 points at the start of the year.
“The profit … is mainly attributable to significant unrealised gains on equity investments recognised in investment return on shareholders’ assets in the comparable 2013 period,” Pan Africa said in a statement.
The index had gained about 11 per cent in a similar period last year, rising from 4,133 points to 4,585 points.
The firm added that lower property sales in the first six months of the year also hurt its overall performance, with its operating surplus in the core insurance business dropping 13 per cent to Sh274 million. It earned Sh168.1 million from such sales in the first half, down from Sh216.4 million last year.
Pan Africa’s property investments include plots and houses in Nairobi’s Runda estate. Volatility in the stock market has had a major impact on the financial performance of insurers whose fortunes rise and fall with the market. The losses and gains are reflected for accounting purposes and only become tangible if the securities are traded.
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