Old Mutual Brings In Ksh 552 Million In Profits In 6 Months

UAP Old Mutual Group has recorded a profit before tax of 552 million shillings in HY 2021 compared to a loss of 57 million shillings for the same period in 2020.

The performance was an improvement in 2020 driven by strong topline growth and investment income performance on the back of the NSE recovery in Half Year (HY) 2021.

Excluding the impact of the Old Mutual Life Assurance Company (OMLAC) consolidation the Group recorded a profit before tax of KES 518m.

Arthur Oginga, Group CEO noted, “The performance of the UAPHL PLC business in H1 2021 was delivered on the backdrop of the initial stages of the expected economic recovery as the different countries we operate in work towards a return to normalcy while managing the risks of subsequent waves of the Covid-19 pandemic.”

Following an Extraordinary General Meeting held on 31 December 2020 by Old Mutual Life Assurance Company Limited (OMLAC) shareholders, a resolution was passed to sell all the shares of the Company to UAP Life Assurance Limited (UAPAL) in exchange for shares in UAPAL.

This resulted in UAP Holdings Plc continuing to exercise control, although its shareholding in UAPAL will reduce from 100 to 55.7 percent with the remaining 44.3 percent being held by Old Mutual Holdings Limited.

Gross written premiums were up 33 percent driven by both the short-term insurance and long-term insurance businesses. The long-term insurance business experienced a recovery compared to the prior year driven by strong corporate sales while the short-term insurance business has sustained the strong growth recorded in 2020.

Net earned premiums were up 17 percent over the same period in 2020 in line with Gross earned premiums which were up 22 percent. Excluding the results of OMLAC,  on a like-for-like basis, gross written premiums were up 26 percent, gross earned premiums were up 14 percent and Net earned premiums were up 8 percent.

Investment income was up 121 percent driven by a recovery in the Kenya equities market. The NSE All-Share, NSE 25, and NSE 20 indices were up 14, 10, and 3 percent respectively in H1 2021 compared to down 17, 22, and 27 percent in H1 2020 on the back of the economic impact of the measures imposed to contain the pandemic. Excluding the impact of the Old Mutual Life Assurance Company consolidation, investment income was up to 90 percent.

Net claims payable were up 48 percent driven partly by increased medical claims relating to Covid cases and hardening of reinsurance terms in 2021 that has led to reduced reinsurance recoveries.

Excluding the impact of the OMLAC first-time consolidation, net claims payable were up 30 percent. The Group has continued engaging with customers who have been impacted by the pandemic and supported them in receiving appropriate care to recover.

Operating expenses were up 2 percent over H1 2020. Costs have remained well contained driven by operational efficiencies on the back of the technology investments we have been making in recent years. Excluding the impact of the OMLAC consolidation operating expenses were down 8 percent.

Interest costs on borrowings were down 8 percent on HY 2020 driven by forex losses on the dollar-denominated debt in the previous year. We refinanced our dollar-denominated debt in the second half of 2020 and as such eliminated the forex mismatch risk.