SANLAM HY2020 EARNINGS NOTE

The Group gross written premiums were up 17 percent or KShs. 621 million from KShs. 3.65 billion for the period to 30 June 2019 to KShs. 4.27 billion for the period to 30 June 2020.

Sanlam Kenya Plc net earned premiums increased to KShs. 3.01 billion from KShs. 2.76 billion in the previous similar period. Thus net earned premiums increased by 9 percent or KShs. 0.25 billion.

Total income for the Group dipped by KShs. 422 million or 9% to KShs. 4.26 billion as at end of June 2020. The dip in total income can be attributable to a 35 percent decline in investment income to KShs. 1.24 billion from KShs. 1.92 billion for the period ended 30 June 2019.

Total expenditure for the group increased by 17% or KShs. 650 million from KShs. 3.74 billion for the period to 30 June 2019 to KShs. 4.40 billion for the period to 30 June 2020. The major cause for the rise in total expenses was a 24 percent rise in claim expenses to KShs. 2.48 billion from KShs. 1.99 billion in the preceding period.

Sanlam Kenya Plc reported a 115% decline in profit before tax from KShs. 937 million for half year period ended 30 June 2019 to a loss before tax of KShs. 136 million for half year period ended 30 June 2020.

The Group posted an after tax loss of KShs. 99 million for the period ended 30 June 2020. The decline in net income can be attributable to a 9% decline in total income for the period and a 17 percent increase in total expenditure. The effective tax rate declined 19 percent from 32 percent in June 2019 to 27 percent June 2020.

Total equity declined to KShs. 1.64 billion from KShs. 2.23 billion in the previous preceding similar period. The decline in equity is attributable to decline in retained earnings and other reserves for the period.

Total assets for the group increased marginally by 1% for the 12-month period ended 30 June 2020. This can be attributed mainly to a 4 percent surge or KShs. 839 million increase in the group’s financial assets to KShs. 21.28 billion from KShs. 20.44 billion in June 2019. Receivables and other assets growth also contributed substantially to the increase in total assets owned by Sanlam Kenya Plc for the period.

Sanlam Kenya Plc book value per share stood at KShs. 9.17 for the 12-month period ended 30 June 2020. This was a substantial decline from a book value per share of KShs. 13.67 posted in June 2019.

Analyst valuation for Sanlam Plc until the final year results are out in March 2021 is KShs. 12.84.

The poor performance of Sanlam Kenya Plc, just like for most sector peers, is attributable to effects of the Covid-19 pandemic currently facing the whole world. Moving forward, Sanlam performance is anchored on successful discovery of a Covid-19 vaccine which will hopefully be done by December this year.