Sanlam sinks into Sh1.97 billion loss
A host of factors, including a sharp decline in business and bad loans, sunk investment firm Sanlam into a Sh1.97 billion loss for the year ended December 2018.
Sanlam lost Sh1.1 billion in long-term investments in bonds that went sour, including debt notes and equity in Kaluworks, Real People and Athi River Mining.
Sanlam Chairman John Simba said Sh650 million in earnings was also shaved off the actuarial adjustment on reserving basis even as the industry performed below par.
SEE ALSO :Sanlam sinks into Sh1.98 billion loss
“As per 2018 industry statistics, in the first nine months of 2018, the short-term insurance segment recorded a year on year revenue growth of 1.7 per cent compared to 7.2 per cent reported the previous year,” Mr Simba said on the firm’s financials released yesterday.
“Underwriting losses for the third consecutive year was at Sh2.8 billion compared to Sh0.75 billion in the previous year. The long-term revenues as well grew by 3.9 per cent compared to the prior year growth of 16.9 per cent.”
However, Sanlam posted a two per cent growth in gross written premiums on the short-term business, while long-term business remained flat.
The firm said the recovery of money lost to distressed companies would be key in turning around the business from the huge losses.
Chief Executive Patrick Tumbo said the firm might pursue litigation against directors of the companies that defaulted for “misleading” the investment firm.
Real People have already drawn out their restructuring plan that will see investors in the South African micro-lender take a 5.3 per cent cut on their deal as the firm struggles to redeem a Sh1.3 billion bond.
Real People was able to get relief after its creditors agreed to cap the rates at 10 per cent from the current 13.65 per cent and altered its terms to a floating rather than a fixed rate.