Table of Contents
Key Points
- Sanlam Kenya’s net profit sank 89% in H1 2025 as rising service expenses outweighed gains from investment income.
- The insurer raised Ksh2.5 billion ($19.36 million) via rights issue, repaid debt, cut borrowings 72% but heavily diluted shareholders.
- Investment income rose 34% to Ksh3.1 billion ($24 million), but higher finance expenses and costs eroded much of the earnings cushion.
Sanlam Kenya Plc, a non-bank financial services provider backed by Kenyan investor Baloobhai Patel, reported lower earnings in the first half of 2025 as higher insurance service expenses and weak underwriting offset gains from investment income.
Profit falls on rising service expenses
The Nairobi Securities Exchange-listed arm of South African insurer Sanlam reported a net profit of Ksh30.9 million ($239,242) for the first half of 2025, an 89 percent drop from Ksh282.2 million ($2.19 million) a year earlier. Earnings per share fell to Ksh0.1 ($0.001) from Ksh1.88 ($0.0146).
Insurance revenue increased 6 percent to Ksh3.7 billion ($28.65 million), driven by higher premiums in life and general business. Service expenses rose to Ksh3.3 billion ($25.55 million) from Ksh3.16 billion ($24.46 million), while net reinsurance costs climbed to Ksh418.2 million ($3.24 million).
Earlier in 2025, Sanlam Kenya completed a fully subscribed Ksh2.5 billion ($19.36 million) rights issue, which funded repayment of a Ksh4 billion ($30.97 million) Stanbic Bank loan. The move cut borrowings by 72 percent and lifted shareholders’ funds 118 percent to Ksh3.85 billion ($29.81 million). However, it diluted investors by more than 77 percent.
Investment income cushions earnings
Investment income rose 34 percent to Ksh3.1 billion ($24 million), buoyed by higher yields in fixed income and equities. Interest income increased to Ksh1.47 billion ($11.38 million) from Ksh1.11 billion ($8.6 million). Yet net finance expenses on insurance contracts nearly doubled to Ksh2.93 billion ($22.69 million), eroding much of the gain.
Operating expenses also tripled to Ksh63.9 million ($494,771) from Ksh20.9 million ($161,828), further squeezing margins. The results reflect the wider pressure on East African insurers battling rising claims, high costs, and regulatory challenges in 2025.
Balance sheet resilience
Baloobhai Patel, who holds 21 percent of Sanlam Kenya through Aksaya Investments, has remained committed to the firm. His stake reinforces his role as one of Nairobi’s most influential investors, with holdings in Safaricom, Absa Kenya, Bamburi Cement, and Diamond Trust Bank.
Patel’s backing underscores confidence in Sanlam Kenya’s restructuring and growth prospects, even as profitability remains under strain. Despite the earnings squeeze, total assets grew 5.6 percent to Ksh41.35 billion ($319.78 million) from Ksh39.17 billion ($303.32 million), underlining balance sheet strength.
