Sanlam reported a Sh1.97 billion loss for the year ending December 2018, attributed to a sharp decline in business operations and non-performing loans. The firm incurred Sh1.1 billion in losses from long-term investments, including bonds tied to Kaluworks, Real People, and Athi River Mining. Sanlam Chairman John Simba noted that an actuarial adjustment reduced earnings by Sh650 million, amid broader industry underperformance.
Industry data showed the short-term insurance segment's revenue grew 1.7% year-on-year in the first nine months of 2018, down from 7.2% in the prior year. Underwriting losses reached Sh2.8 billion for the third straight year, up from Sh0.75 billion the previous year. Long-term revenue growth slowed to 3.9% in 2018, compared to 16.9% in the prior year.
Sanlam achieved a 2% increase in short-term gross written premiums, while long-term business remained stagnant. The company emphasized that recovering funds from distressed entities would be critical to reversing the losses. CEO Patrick Tumbo indicated the firm might take legal action against defaulting companies' directors for alleged misrepresentation.
Real People unveiled a restructuring plan, requiring South African micro-lender investors to accept a 5.3% reduction in their stake to address a Sh1.3 billion bond default. Creditors agreed to cap interest rates at 10% from 13.65%, switching the bond to a floating rate structure.
