TANZANIA – Medical underwriter AAR Insurance has commenced the process of winding-up of its Tanzania business citing financial difficulties.
The move comes just after the Kenyan business recorded a 55 per cent drop in performance for the year ended December 2020, attributed to high claims due to Covid-19 pandemic.
In a memo to staff, AAR Health Care Limited Acting CEO Andrew Rowell said the firm has been facing financial difficulties “for some time” now worsened by the failure of the medical insurance model in Tanzania, the Covid-19 pandemic, and a decline in traffic to their clinics.
“The Company’s parent, AAR Health Care Limited as a major creditor to the company, is no longer willing to support the financial requirements of the company and it is on this basis that the Board of Directors has resolved to initiate a creditor’s voluntary winding up process,” he said.
A creditors meeting is scheduled for April 22, to formally appoint a liquidator.
Rowell told staff business operations would continue as normal pending the creditors meeting and their employment contracts would not be interfered with.
“The Company’s parent, AAR Health Care Limited as a major creditor to the company, is no longer willing to support the financial requirements of the company and it is on this basis that the Board has resolved to initiate a creditor’s voluntary winding up process”
Andrew Rowell – Ag CEO, AAR Health Care Limited
“I wish to thank you personally for your loyalty to the company and sincerely regret that the creditors are being forced into the pending action. It is certainly not due to the fault of our employees’ effort but mainly the economic environment,” said Rowell.
AAR started its operations in 1984 solely doing medical evacuations by road and air and has since become giant health insurance across East Africa.
It operates over 28 clinics in Kenya, Uganda and Tanzania serving over half a million outpatients annually.
In its financial performance report for the year 2020, the company registered US$2.15 million net profit which is a reduction from the previous financial year which stood at US$4.76 million in 2019.
Profit before tax also declined from US$6.96 million to US$2.92 million in the same period.
AAR Insurance Kenya Managing Director, Nixon Shigoli, attributes the surge in claims to COVID-19 impact on business and families.
“2020 was an extremely challenging financial year given the sudden shocks of the new coronavirus health crisis which significantly affected our bottom line given impact on many employers and families.”
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