Insurance company UAP Holdings has announced that it recorded a Ksh. 305 million net loss for the half year ending 30th June 2020. This marks a huge reduction from the Ksh. 383 million net profit the company reported for the same period in 2019.
Gross written premiums increased to Ksh. 11 billion from Ksh. 9.9 billion which was reported in the same period last year. Investment income decreased to Ksh. 1.3 billion from Ksh. 1.9 billion which total income decreased slightly to Ksh. 9.5 billion from Ksh. 9.8 billion in 2019.
Total expenses and commissions increased to Ksh. 4 billion from Ksh. 3.2 billion recorded in a similar period last year. 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 due to higher lives underwritten, higher IT costs following implementation of a new general ledger system in late 2019. There were also 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 also increased to Ksh. 756 million from Ksh. 608 million in 2019. The rise in finance costs was driven by forex losses on dollar denominated debt (Ksh. 146 million) as the Kenya Shilling depreciated 5.1% in H1 2020 compared to 0.4% in H1 2019.
The Group CEO, Arthur Oginga, during the Investor briefing said “We continue to drive our profitable growth agenda ensuring that business is transparently and appropriately priced for the risk underwritten, including rewarding good risk. Partially as a result of these and other management initiatives to reduce cost of claims through supplier management, early settlement discounts etc, net claims reduced by 11.8% compared to H1 2019. The business also benefited from a reduced number and severity of claims incidents following the government-imposed lockdowns and curfews in quarter two.”
The board of directors have not recommended a dividend for the half year ending 30th June 2020.