DROP

UAP Holdings post Sh57m loss on poor equities performance

The listed diverse financial firm posted a profit of Sh517million same period in 2019

In Summary
  • Gross written premiums were up double-digit at 11 per cent driven by core short-term insurance businesses.
  • Operating expenses were up 32 per cent.
UAP Old Mutual MD Insurance, David Kuria (Left) and Group CEO, Arthur Oginga following the announcement of H1 results.
UAP Old Mutual MD Insurance, David Kuria (Left) and Group CEO, Arthur Oginga following the announcement of H1 results.

UAP Holdings Plc reported a Sh57million loss in the first six months of the year, diluting a profit of Sh517million posted the same period last year.

The poor performance was attributed to slow activities in the equities market.

The group however recorded improved cash flow generation over the period coupled with improved claims ratios.

This was delivered on the backdrop of the COVID-19 pandemic which has adversely impacted different sectors of the economies that the Group operates in.

Gross written premiums were up double-digit at 11 per cent driven by core short-term insurance businesses.

This reverses the previous trend of declining to flat growth experienced in recent years.

Net earned premiums were up 1.4 per cent over in line with Gross earned premiums which were up 2 per cent.

Investment income was down 34 per cent driven by fair value losses of Sh771million on equity investments in H1 2020 compared to fair value gains of Sh407million in H1 2019.

The NSE All-Share Index was down 17.2 per cent in H1 2020 compared to 6.5 per cent up in H1 2019 driven by reduced investor appetite for equities off the back of the pandemic.

 “We continue to drive our profitable growth agenda ensuring that business is transparently and appropriately priced for the risk underwritten, including rewarding good risk,” said the Group CEO, Arthur Oginga.

Operating expenses were up 32 per cent.

This was driven by timing differences resulting from the full implementation of IFRS 16 in H2 of 2019, higher software costs in the medical business, higher IT costs following the implementation of a new general ledger system, increased distribution costs in line with topline growth and increased one-off professional fees related to claims management initiatives on the motor book.

Finance costs were up 24 per cent over H1 2019 driven by forex losses on dollar-denominated debt (Sh146million) as the Kenya Shilling depreciated 5.1 per cent in H1 2020.