This archive report was first published on 26 September 2019.
Sanlam, a leading insurer, has introduced a voluntary early retirement program (VER) targeting staff members above the age of 50, as part of its efforts to cut costs and improve operational efficiency.
According to Sanlam Kenya Chief Executive Officer Patrick Tumbo, the company is now in a competitive environment that requires it to be 'nimble' and control costs, which are 'what management can control on the board as the outside is uncontrollable.'
The VER program, which runs until October 3, aims to rationalize staff within the life and general insurance business, covering 193 employees with an average age of 35.
Sanlam seeks to cut costs by an annual figure of Ksh.200 million, as part of a bigger strategic initiative to create more efficiency in its expense base, according to Chief Financial Officer Kevin Mworia.
The company's efforts to cut costs come after it sunk to its first loss in 15 years in 2018, with a loss of Ksh.1.97 billion largely due to the impairment of its corporate bond investments in three firms, including Athi River Mining Company (ARM).
At the close of December 2018, staff costs accounted for 52.8 percent of total operating costs, amounting to Ksh.942.8 million.
Staffers who opt for the early retirement scheme will receive incentives, including a 30 percent discounting of existing loans accruing back to the insurer and the payment of a month's salary for every three years of service.
