UAP Insurance release of 89 staff at Sh342m hits Group’s bottom line

UAP Insurance release of 89 staff at Sh342m hits Group’s bottom line

May 22, 2019 0 By mykenyancareers
UAP CEO MWANGI - UAP Insurance release of 89 staff at Sh342m hits Group’s bottom line
UAP Group Chief Executive Peter Mwangi

NAIROBI, Kenya, Apr 2 – UAP Old Mutual Holdings Limited has posted a loss of Sh518 million in 2018 reversing the Sh608 million profit it announced in the previous year. 

UAP Group Chief Executive Peter Mwangi said the group’s performance was affected by a one-off restructuring that saw 89 employees leave the insurance at a cost of Sh342 million, an exercise that was concluded in the first half of 2018.

The financial services company also attributed the 136 percent decrease to unrealised losses in the equity portfolio, underperformance of it’s South Sudan subsidiary and credit loss impairments.

The results come four months later after the firm issued a warning citing lower than expected projections in the market in 2019.

“The fair value moments equally affected the insurance company’s performance linked to poor performance in the Nairobi’s security exchange down by 23.5 percent. We all understand that NSE20 headlines dropped by more than 18 per cent which in turn affecting UAP holding and saw it lose Sh 478 million. Kenya and Tanzania have also had an unfavourable economic environment,” he said.

“We also witnessed our performance hugely affected by International Financial Reporting Standards 9 ECL impairment which became effective in the month of January at Sh 780 million,” the CEO added.

The company also observed a trend on net payable claims experienced from the health and motor and insurance industries.

“The political tension around South Sudan saw us dealing with a lot of health matters that led to the company spending more, “the CEO mentioned.

Fraud cases have also surrounded the insurance company where it has witnessed a loss of Sh35million in the motorcycle sector.

“What we have seen is that there’s an adoption of double invoicing and some of our clients played the game so well. For now, we have a system that can show us if a client has more than one insurance channels. This will help us curb fraud that has so far affected our performance,” said Mwangi.

Currently, the company is focused on changing its investment profile focused on long-term investments which will have government and private securities under one roof.

Analysts at Genghis Capital said the management’s conservative strategy is likely to stifle top-line growth over the short term horizon.

“This strategy, coupled with prudent provisioning under IFRS 9 ECL model signals muted growth prospects in the near term and hence the inclination to efficiency.”