KENYA – UAP Holdings Plc, an investment, retirement, and insurance group, reported a KSh57million (US$0.53m) loss in the first six months of the year, diluting a profit of KSh517million (US$4.77m) 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 KSh771million (US$7.12m) on equity investments in H1 2020 compared to fair value gains of KSh407million (US$3.76m) 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 execute on our integrated financial services strategy supported by digital with a keen focus on profitable growth. Our business is resilient with a strong balance sheet and improved cash generation,” group CEO Arthur Oginga said.
“This will position us well to navigate the headwinds that the COVID-19 pandemic shall present in the second half of the year. We remain cautious given that the pandemic is still unfolding and have put in place measures to ensure our customers continue to receive services seamlessly.”
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 as the Kenya Shilling depreciated 5.1 per cent in H1 2020.