Sanlam Kenya PLC has announced that it has restructured its foreign currency-denominated loan into local currency facility. The disclosure made alongside its half-year trading results is a bold move geared at preserving shareholder value.
Sanlam has confirmed it restructured US$27 million loans into a Ksh3 billion facility with a local banking institution to mitigate against future forex losses occasioned by the weakening of the Kenya shilling against the United States dollar.
Though insurance revenues improved over the half-year period ending 30th June 2021, the company posted a Ksh291.8 million loss, up from a Ksh99.1 million loss posted in the same period last year. The loss was attributed to one-off forex losses and a more prudent company stance towards provisioning as the business tightens management of its future financial outcomes in a recovery period from the onset of the Covid-19 pandemic in 2020.
The company’s gross insurance revenues improved significantly for both life and general businesses under the dark Covid trading cloud. Half-year consolidated gross written premiums at Ksh5.9 billion was a 38% improvement compared to the prior year’s Ksh4.3 billion. Sanlam General posted a 32% growth, while Sanlam Life posted a 44% growth in insurance revenues. Investment income at Ksh1.5 billion was 23% higher than the prior year’s Ksh.2 billion. Net benefits and claims grew in line with the growth in insurance revenues.
Sanlam Kenya Plc Group CEO, Dr Patrick Tumbo, speaking when he released financial results on 18th August, said that the business will continue to take a long-term view in the execution of its strategy and will build on current successes in its insurance business to grow profitably.
In its 2020 annual report, the firm had disclosed the significant currency exposure on the borrowings, which stood at Ksh2.976 billion at the end of the last financial year. The loan proceeds were in US dollars, as well as loan interest payments.
“The debt restructuring which commenced in 2020 is now complete, and it will provide much-needed relief as the forex loss risk is now mitigated going forward,” Dr Tumbo said. “At Sanlam Kenya Plc, we have also been affected by Covid-19, which has accelerated life and general insurance policy claims, but we expect swift recovery as the pandemic containment measures including mass vaccinations begin to bear fruit.”
See Also >> Radio Presenter Launches Venture To Rival YouTube
As part of its strategic business plan, Dr Tumbo disclosed that the firm is executing a sustainable plan considering the impacts of the Covid-19 pandemic on the economy and insurance industry.
He said the plan focuses on enhancing value drawn from the firm’s business digitization initiatives, including adopting e-commerce insurance products distribution and sales. He said the utilization of digital solutions would positively reduce the firm’s operating cost base while improving customer experience.
He said Sanlam Kenya has also reached several strategic partnerships, which are expected to bear benefits from the second half of the year going forward.
Leave a comment