- The firm posted a 91% drop in net earnings to Sh2.03 billion
- The Nairobi Securities Exchange (NSE) listed insurer posted a net profit of Sh3.9 billion same period last year.
A double hit of weak shilling and provisions under the accounting standard saw Jubilee Holdings's half-year net profit drop by 91 per cent to Sh2.04 billion in the first six months of 2023.
The Nairobi Securities Exchange (NSE) listed insurer posted a net profit of Sh3.9 billion same period last year.
According to the firm's financial records for the first six months, it spent close to Sh300 million to provide for anticipated bad loans on the new International Financial Reporting Standard (IFRS17) that came into effect in January.
According to Jubilee Holdings CEO Julias Kipngetich, profit before tax excluding gain from the sale of subsidiaries based on the past IFRS 4 was Sh2.7 billion but drops to Sh2.4 billion when IFRS17 applies.
"To ensure compliance, JHL has fully adopted the new IFRS 17 Standard across all its entities and taken a prudent approach to eliminate volatility in results and ensure future profitability,'' Kipngetich said.
The net impact of IFRS 17 is that the key drivers of profit, investment, and underwriting are made transparent.
It ensures that insurance companies provide relevant information that faithfully represents insurance contracts.
This allows users of financial information to assess the impact that insurance contracts have on the financial position, financial performance, and cash flows of an insurance entity.
Under IFRS 4, there were different accounting policies per insurance contract hence a lack of comparability of insurance companies across countries and of insurance compared to non-insurance companies.
Estimates were not required to be updated and it was difficult to see key drivers of profit.
The insurer suffered over Sh100 million in forex charges as the shilling tumbled 14 per cent against the US dollar in a period under review.
The diversified financial group reported a gross profit of Sh2.4 billion, down from Sh2.9 billion in a similar period last year.
"Excluding the gain on the sale of the General Insurance business to Allianz and before the impact of IFRS 17, the Group recorded a growth of nine in gross profits compared to a similar period last year,'' Kipngetich said.
Even so, the board has announced the payment of an interim dividend of Sh2 per share totaling Sh145 million.
The company’s top line has continued to grow despite the sale of the General business to Allianz.
According to the financial report, it the Group’s Insurance Service Revenue grew by 11 per cent from Sh8.8 billion to Sh9.8 billion.
The total assets grew by 12 per cent from Sh161 billion to Sh181 billion cementing the company’s financial position and its ability to meet its obligations.