UAP Holdings Plc reported a 20% growth in total income driven by solid gross written premium growth and higher investment income.
Claims were flat on previous year while cash conservation efforts led to positive cash flow generation in 2020. The Group recorded a 2020 loss before tax of KES 1,048m compared to a loss of KES 3,229m for the same period in 2019. The loss was driven by an increase in operating expenses of KES1.4bn, largely on account of once off-balance sheet clean-up impairments and covid related expenses.
Gross written premiums were up 9% driven by core short-term insurance businesses reversing the trend of declining to flat growth in recent years. Net earned premiums were up 2% over 2019 in line with Gross earned premiums which were up 4%.
Net Investment income was up 505% driven by non-recurrence of the fair value write-downs on property investments experienced in 2019. The valuations of the Group’s properties held in 2020 due to improving occupancy levels across the portfolio. Investment Income excluding fair value impairments was up 12% despite the negative equities’ performance for the year due to increased rental income on properties.
Arthur Oginga, Group CEO UAP Old Mutual, said “We are pleased with the progress made in the execution of our strategy. Our profitable growth agenda remains on track while the operational improvements we continue to invest in, are delivering much better claims outcomes for both customers and ourselves”.
Operating expenses were up 24% over 2019. This was driven by once off impairments on receivables in line with a more conservative stance, increased distribution and marketing costs in line with topline growth and higher software related costs.
Interest cost on borrowings were down 7% over 2019 driven by the drop in the LIBOR rate from 2% in the prior year to 0.2% in 2020 on dollar denominated debt and a drop in the CBR rate on local currency denominated debt. In the second half of 2020 the Group refinanced the dollar denominated debt in local currency thus benefitting from both movements.
