Sanlam Kenya Bounces Back into Profitability after Massive Layoffs

Sanlam Kenya PLC has returned to full-year profitability following the release of the firm’s 2019 trading results.

Cementing its corporate recovery, the local non-bank financial services provider has emerged from a Sh 2.1 billion pre-tax loss.

The Nairobi Securities Exchange (NSE) listed firm with interests in Life and General Insurance business segments, has bounced back to full-year profitability, posting a Sh 550 million pre-tax profit.

See: Virtual Motor Insurance Certificates Replace Physical Certificates

Sanlam Kenya Group CEO Dr Patrick Tumbo attributed the firm’s full-year return to profitability on the consistent execution of a corporate turnaround strategy.

The strategy, Tumbo said, had focused on improving the firm’s operating efficiencies while paying particular attention to client service.

Investment returns

Tumbo said the firm retains a positive outlook for the current financial year with revenues and earnings from the Group’s core insurance business expected to improve. Investment returns are also expected to reflect positive results from improved asset management.

“At Sanlam Kenya, we have been pursuing our earlier announced strategy that focused on cost containment and aggressively growing our revenue base in the short and medium-term. The full-year results reflect the success of this strategy and provide a good foundation for sustained growth,” said Tumbo.

He added, “Ongoing stakeholder partnerships, product and process innovations in 2020 will translate to a better and improved customer journey.”

Also read: Importance of Digital Lending in Driving Financial Inclusion 

Within the period under review, the Sanlam Kenya group posted improved results posting a pre-tax profit of Kes 550 million compared to a prior year’s loss before tax of Sh 2.1 billion.

Total revenues from gross written premium and investment income improved by a remarkable 50% compared to the previous year, while total outflows from policyholder benefits and expenses increased by 4%.

Gross written premium improved by 10% as a result of 30% growth in the short-term insurance business. At the same time, investment income performance made a complete turnaround reporting Kshs 2.7 billion in revenues compared to Kshs 187 million that included the impact of impaired assets in the previous year.

Sanlam Kenya’s improved performance reflected the positive strides made by the Group’s insurance subsidiaries.

The firm’s long term insurance business, Sanlam Life, reported a complete turnaround to profitability posting a pre-tax profit of Kshs 964 million compared to prior year’s loss of Kshs 853 million.

Sanlam General, the firm’s short-term business maintained its profitability score on the back of a 30% growth in gross written premiums.

Sanlam Layoffs

In September last year, Sanlam gave employees only eight days to apply to leave the firm, following an announcement that its board had approved the commencement of the voluntary early retirement (VER) scheme.

The VER was part of the listed firm’s organisational turnaround strategy and is seeking to cut costs which have grown 42% in the space of four years.

According to Sanlam, the VER was open to permanent and pensionable staff members over the age of 50 years.

Employees who accepted the offer were set to be released from the company at the end of October.

Under the VER terms, the financial services firm was offering a severance pay equivalent to one (1) month’s salary for every 3 years of service.

The firm would also offer successful applicants compensation for unused leave days and a 30% loan rebate on the balance of any outstanding in-house staff loans. Read >>

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