UAP holdings record an 8 percent drop in net earnings

58
UAP Holdings have recorded an 8 percent drop in net earnings for the year 2016
UAP Holdings have recorded an 8 percent drop in net earnings for the year 2016

UAP Holdings has recorded an eight per cent drop in net earnings for the year 2016. The drop is as a result of higher claims and lower commissions earnings. In 2015, the insurer earned Sh826 million from Sh897.

The Group’s Gross Written Premium (GWP) grew by 15 per cent with the net earned premium up by 28 percent in the same period.

The firm recorded of all in commissions pulling down its net earnings too. “Commission income reduced by 33 % driven by a change in the business mix as well as a reduction in fronting business. Total income was up 18 percent to Sh 19 billion from Sh 16 billion in 2015,” the firm noted in a statement.

A 23 percent rise in net claims payable was also dragging down its net profitability although the short-term business claims ratio dropped to 62 percent in 2015 to 59 percent in 2016.

This was driven by the Company’s focus on profitable business growth and claims cost management initiatives.

The absence of Sh203 million tax credits enjoyed in 2015 also hurt the financial group’s bottom line.

UAP has also recorded a 28 percent rise in long-term business net claims brought about by an increase in actuarial reserves in line with new business growth.

“We expect that these reserves will unwind over time and contribute to future earnings,” noted the firm. The total comprehensive income for the year was also negatively impacted by market factors resulting in a loss of Sh101 million.

This was attributed mainly to the impact of the bear run at the Nairobi Securities Exchange underwriter’s equity holdings as well as defined benefit pension schemes and the devaluation of the South Sudanese pound.

The group’s profits had almost halved, recording a 46 per cent drop to Sh896.6 million (2015) from Sh1.67 billion in 2014.

UAP directors have recommended a dividend of Sh1.70 per share. The payout, which will also be subject to withholding tax, is an improvement on the zero dividends last year.

The firm is pegging future growth prospects on its focus on the provision of more financial services in the wider East African market.

Growth is also expected to be supported by income expected from completion of key property projects in South Sudan (UAP Equatorial Tower) and Kenya (UAP Old Mutual Tower).