Ratio Magazine :: The Inside Track to East Africa’s Economies - Kenya: Press Releases: UAP Group Defies Market Trends to Record KES1.2bn Profit

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Kenya: Press Releases: UAP Group Defies Market Trends to Record KES1.2bn Profit

Friday, 27 April 2012

Nairobi, 26 April 2012 --- Financial Services Group UAP Holdings Ltd has announced strong profitability for the year ended 31 December 2011, surpassing the KES1bn mark.

The group’s profits rose by 53% to KES1.21bn in 2011, up from a profit of KES790m achieved in 2010. Earnings per share increased by 68% to KES7.40 per share, from KES4.40 in 2010, a strong leap in profitability against a backdrop of uncertain economic conditions experienced in 2011.

Announcing the results, UAP’s Group Managing Director James Muguiyi said new business growth coupled with positive investment performance propelled the group’s strong performance during the year. The group’s operations in Kenya, Uganda and South Sudan performed well in a challenging economic environment.

“Our 2011 results are a significant improvement over 2010 on all key measures, with excellent growth in profitability, driven by a strong growth in premiums, investment income and containment of costs. Premiums growth has been aided by growth in new business, introduction of new products across all our operations in the region and enhancement of our distribution channels,” he said.

Total revenue growth during the year was 25%, with an average growth of 26% over the last four years. The operations in Kenya, i.e. UAP Insurance Company and UAP Life Assurance, contributed 71% of the total revenues, whilst UAP Insurance Uganda and UAP Insurance Sudan contributed 20% and 9% respectively of the total revenues.

“Investment income held steady during the year, despite a poor performance of the stock market which decreased by over 28%. This positive investment performance was driven by a well thought out strategy on diversification of the investment portfolio across key stable asset classes including properties and fixed income investments,” said Mr. Muguiyi.

Net claims and policyholder benefits payable increased by 21% whilst the net earned premiums increased by 25%, reflecting an increased quality of underwriting and new business. The group’s expenses was contained and only increased by 2%, reflecting benefits of enhanced internal controls and increased efficiencies in operations.

The group’s total assets increased by 17% to KES14.5bn as a result of significant increases in the group’s investments.

“The strategy of regional diversification for the UAP Group in East Africa’s key markets of Kenya, Uganda and South Sudan, coupled with a balanced and optimal investment in key assets classes including properties, is paying off and has resulted in a positive financial performance for the Group in a challenging economic environment,” he added.

Additional Capital

Following the year end, the Group has subsequently injected KES500m into UAP Life Assurance to enhance its capital base and therefore increase its underwriting capacity and cushion it against adverse movements in equity markets. The increased share capital makes UAP Life Assurance one of the highly capitalised life assurance companies in the region.

“The drive to increase the capital level for our operating subsidiaries is part of a proactive strategy to consistently meet the needs of a dynamic market. We believe this capital injection will further strengthen UAP Life’s capital base, while laying an even stronger foundation for a healthy and sustainable development of the company’s business going forward,” Mr. Muguiyi said.

Mr. Muguiyi added that the group would continue with its regional expansion initiatives with market entry planned for three countries in East and Central Africa region during 2012.

The group’s real estate development portfolio, with three landmark real estate developments in Kenya, Uganda and South Sudan, is expected to continue contributing positively to the diversification of its investments. The group is also finalising a capital raising initiative to fund its growth strategy.

“These initiatives will ensure the diversification of the group across key geographical markets and in its investment portfolio, and therefore deliver sustained and strong growth in earnings,” he concluded.

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