Sanlam Kenya is divesting its real estate, bottled mineral water and asset management businesses, as the insurer struggles to shore up profits after years of losses and drying up profits for shareholders.
The company, a subsidiary of South Africa's Sanlam Financial Services Group Limited, says Sanlam Investments Limited (asset managers), Kimisimi Mineral Water Company (bottled water) and Mai Properties (real estate) – have remained inactive and the group is liquidating these companies. .
“Other wholly-owned subsidiaries are dormant and in the process of liquidation, and include Sanlam Investments Limited, ChemiCemi Mineral Water Company, and Mae Properties,” the company says in its latest annual report (2023).
Liquidation (or liquidation) is the process by which a company's existence is ended by selling its assets to pay off its debts. Any funds remaining after settling all debts, expenses and costs are distributed to the company's shareholders.
Sanlam Kenya, listed on the Nairobi Stock Exchange (NSE), is facing a financial crisis largely caused by high financing costs and dwindling investment returns.
The group's net loss widened 53 per cent to Sh127 million ($992,187.5) in 2023 from Sh83 million ($648,437.5) in 2022, marking the fourth straight loss in a row after reporting a net profit of $114.4. 1 million shillings ($893,750) in 2019.
Its cumulative losses rose 14.57 percent to 2.28 billion shillings ($17.81 million) from 1.99 billion shillings ($15.54 million) in the same period, exposing shareholders to the 10th straight year of earnings drought.
The insurer's last dividend to shareholders came in 2013 at 4.5 shillings ($0.03) per share amounting to a total of 432 million shillings ($3.37 million) with net profits reaching 1.25 billion shillings ($9.76 million).
Last year (2023) the group's life and general insurance businesses recorded net profits of Sh534 million ($4.17 million) and Sh123 million ($960,937.5) respectively, with part of these profits being used by the parent company (Sanlam Kenya Plc) to settle its rights. Financial obligations during the year.
The group's total borrowings as of December 31, 2023, stood at Sh4.65 billion ($36.32 million), with total financing costs increasing to Sh604.61 million ($4.72 million) from Sh455.34 million ($3.55 million) in 2022.
Sanlam Emerging Markets, the intermediary parent company of Sanlam Kenya Plc, extended a Sh1.08 billion ($8.43 million) loan to Sanlam General Insurance Ltd to bridge the capital shortfall on May 5, 2022. The loan has been extended for another 18 months and will now mature On May 5, 2025.
In addition, the loan agreement between Sanlam General Insurance Limited (Borrower) and Sanlam Emerging Markets (Pty) Ltd (Lender) provides that repayment shall not commence or continue if this results in the Capital Adequacy Ratio (CAR) of the Borrower falling below 100 percent
As of December 31, 2023, the group also has a Sh3.5 billion ($27.34 million) credit facility with Stanbic Bank which is scheduled to mature in March 2025.
Sanlam Kenya Plc on 21 December 2017 and on 19 December 2018 obtained loans from Sanlam Capital Markets Property amounting to US$10 million (Shs1.28 billion) and US$17 million (Shs2.18 billion), respectively for two years to settle balances between related corporate parties. Recapitalizing the group's insurance business and financing the completion of the Sanlam Tower.