INSURANCE companies had a rough time last year with one of its top firms – UAP Holdings – reporting yesterday its profits for last year almost halved. UAP announced a 46 per cent drop in net profit for 2015 after issuing a profit warning last year, alongside Britam Holdings, Liberty Holdings and Pan Africa Insurance.
UAP Holdings’ profit after tax dropped to Sh896.6 million from Sh1.67 billion in 2014. Consequently, the firm said there will be no dividends for shareholders this year.
Among the six listed insurance firms, only Jubilee and CIC Insurance Group – which will announce its results tomorrow – have not issued a profit warning for the period ending December 2015. The Insurance Regulatory Authority’s industry report for January to September 2015 period indicates that Jubilee, APA, UAP, CIC, ICEA, Heritage, AAR, GA, AIG and Britam were the market leaders in general insurance. The companies controlled a big share of the industry’s total gross premium income.
UAP, which trades on the over-thecounter market at Nairobi Securities Exchange, attributed the profit drop to poor performance of the securities market and weak regional currencies. “The 2015 investment performance was impacted by the challenging business environment within the East Africa region, which was largely attributable to an increase in interest rates and significant strengthening of the dollar against local currencies,” the firm said in a statement.
In general, a record 18 firms listed at the NSE issued profit warnings, indicating the unfavourable business environment was not unique to the insurance sector. The poor performance of the stock market last year also depressed returns for pension funds.