Sanlam Kenya reported a Sh1.97 billion net loss, its first in 15 years, driven by write-offs on bond investments in three struggling companies, including ARM Cement. The Nairobi Securities Exchange-listed insurer recorded the deficit for the year ending December 2018, marking a stark contrast to its Sh53 million profit in 2017.
The loss stemmed from impairment charges of Sh1.14 billion related to debt notes and equity stakes in Kaluworks, Real People, and Athi River Mining. A separate Sh650 million adjustment to reserving practices under Insurance Regulatory Authority guidelines further eroded earnings, according to the company's statement.
This marks the first time since 2003 that the insurer led by Patrick Tumbo has posted a loss. The financial strain contributed to a 20% decline in total income to Sh5.9 billion and a 12.9% rise in operating expenses to Sh8 billion. Shareholders will likely face another dividend-free year following the results.
Earlier in 2019, the firm warned of a profit shortfall linked to full impairment of corporate bond holdings and slowed economic growth, as disclosed in un-audited half-year reports.
