•Investment income dropped 78.3 per cent driven by property devaluations which were necessary in view of the prevailing market conditions
•The property business reported a loss before tax of Sh4.88 billion representing a 268 per cent decline.
UAP Holdings' net loss grew more than fivefold last year as the firm grappled with an increase in net payable claims and a decline in earnings from the property markets in Kenya and Uganda.
The listed insurer’s net loss grew to Sh3.37 billion in 2019 compared to Sh517.88 million the previous year.
UAP Holdings Group chief executive Arthur Oginga said the poor performance was largely driven by one-off fair value write-downs on the Group’s investment property portfolio due to the softening of the markets in Kenya and Uganda and prevailing operating environment challenges in South Sudan.
“Excluding the property business performance, the Profit Before Tax (PBT) for 2019 was Sh1.65 billion representing a substantial improvement compared to Profit Before Tax of Sh847 million in 2018 on a like for like basis,” he said.
Investment income dropped 78.3 per cent driven by property devaluations which were necessary in view of the prevailing market conditions.
The property business reported a loss before tax of Sh4.88 billion representing a 268 per cent decline.
“Our occupancy has however improved and we expect this to drive improved performance going forward,” Oginga said.
The firm’s net claims payable grew 11.8 per cent year on year to Sh11.61 billion compared to Sh10.39 billion in 2018.
Oginga said the increase was driven by a jump in claims during the review period due to the withdrawal of NHIF coverage from several private health institutions and increased reserving across all the Group’s Health businesses.
“In Kenya, the withdrawal of the NHIF rebate adversely affected our claims management resulting in a large increase in claims expense,” he said.
The Group’s operating expenses grew 9.1 per cent due to a revaluation loss of the owner-occupied investment property portion.
The firm’s general insurance business reported a profit before tax of Sh2.33 billion, growing 133 per cent compared to 2018.
The life insurance business also grew 113 per cent, recording Sh392 million profit before tax compared to the precious year.
Net earned premiums increased by 3.8 per cent in 2019. According to Oginga, income contribution from outside Kenya increased to 39 per cent from 36 per cent over a 5-year period in line with the Group’s strategy to geographically diversify its business.
"This is despite reduced contribution from South Sudan owing to the adverse operating environment," he said.
The board of directors did not recommend a dividend payout for the 2019 financial year to conserve cash particularly under the circumstances of coronavirus.
“The general downturn is likely to impact our general insurance businesses in terms of ability of our customers to pay premiums,” Oginga said.
The firm is working to digitise it operations to improve services during as the country deals with the coronavirus pandemic as well as supporting customers by arranging premium holidays.