UAP Holdings cuts full year loss to Ksh.1.3B

UAP Holdings has cut its full year loss for the period ending in December 2020 by 62.9 per cent to Ksh. 1.3billion.

The significant loss reduction is widely attributable to improved investment income with the regional-based insurer truncating fair value losses in its properties portfolio.

For instance, UAP’s investment income rose 10.8 per cent to Ksh.4.1 billion with fair value losses in the period shrinking to Ksh.296 million from a higher Ksh.3 billion in 2019.

Previously UAP had been forced to make significant provisions on its property segment to reflect the low valuation of its real estate holdings.

The underwriter however incurred a Ksh.1 billion loss from its investments in the stock market after the downturn of the Nairobi Securities Exchange (NSE) at the start of last year.

UAP’s complete loss turnaround was nevertheless dented by increased expenses from the company’s ongoing balance sheet restructure and a one off expense to put up remote working infrastructure.

The firm’s total expenses and commissions rose by 21 per cent to Ksh.9.8 billion from Ksh.8.1 billion a year prior.

Net investment income for the Group expanded by five fold on the back of reduced impairments and improving rental income supported by a higher occupancy rate in its properties.

The property portfolio now has an average 85.3 per cent occupancy rate across its three markets in Kenya, Uganda and South Sudan.

Occupancy rates in South Sudan have for instance doubled in the last three years while its prime UAP Tower in Kenya is now fully occupied.

Moreover, UAP’ core underwriting business was on the resurgence in 2020 with net earned premiums in the period rising to Ksh.16.5 billion.

UAP Holding Chief Executive Officer Arthur Oginga expects the company to complete its turnaround from loss making in 2021 supported largely by the finalization of debt restructure and the digitization of its business.

“We are close to finalizing the restructuring of our debt to realign it to the profile of our cash-flows in terms of our duration and currency. We are also on the tail end of the merger of our life business with only regulatory approval pending,” he said.

“We have made additional investments in our technology infrastructure which will allow us to scale up our digital products must faster going forward.”

The board of UAP has not recommended the payment of a dividend to shareholders as it retains a cash conservation stance which has seen the Group’s liquidity position improve in the past year.