Ratio Magazine :: The Inside Track to East Africa’s Economies - Kenya: Press Releases: UAP Posts KES445m Profit

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Kenya: Press Releases: UAP Posts KES445m Profit

Tuesday, 19 May 2009

19 May 2009 --- Leading insurer UAP Holdings Limited today announced that in the twelve month financial calendar ending 31 December 2008, the company realised a pre tax profit of KES445m. This compares to a KES1.1b pre tax profit recorded in 2007. The company also reported a 29% increase in total premiums for the year from KES2.9bn in 2007 to KES3.7bn in 2008.

In a statement from the head office, the Group Managing Director James Muguiyi explained that the pre tax profits had fallen short of expectations due to a number of extraneous factors. The company realised lower dividends and reduced capital gains from investments in companies quoted at the Nairobi Stock Exchange especially as a result of the prevailing bear run that had afflicted the local bourse. In addition, lower interest rates during the year resulted in lower return on money market operations in which the company held over KES1.6bn at the year end.

UAP also incurred a large impairment of KES376m for some shares held by the company on its profits in accordance with financial reporting standards.

Thirdly, he pointed out that high inflation had resulted in higher claims costs and operating expenses for the business during the reporting period.

According to the statement, most of the shares that UAP held across various counters had values above the average purchase prices signalling that they were still good assets. “We maintain a very bullish view of the market and are convinced that the current bear run will end. The fundamentals of the shares in which we have invested remain strong,” he added.

As part of its strategic focus, UAP had embarked on a portfolio diversification exercise that has seen it target different investment areas. During the year under review, the company generated increased rental income from its properties, earning KES140m, up from the previous year’s KES38m.

Said Muguiyi: “The financial performance was boosted by the strategic diversification of our investment portfolio into commercial property. We now own three prime office properties that contributed a healthy income in the midst of gloom in the financial markets.”

The company balance sheet remains very healthy with total assets having grown to KES9.4b with a large 40% being shareholders funds. UAP solvency is also very strong and is consistent with the AA credit rating by Global Credit Rating, the highest such awarded to any insurance company in the East African region.

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