[2008-08-28]  Pan Africa Insurance 2008 H1 Profits Jump a Massive 798%
Pan Africa insurance Holding Ltd. has reported a whooping 798% increase in its 2008 H1 profits to Ksh.236 million compared to Ksh.26 million in the same period last year. This has been attributed to the good performance of its Life business and unrealized investment returns from its insurance associate; APA Ltd. the insurer’s gross premium income went up 20% to stand at Ksh.1.1 billion. Over the same period Pan Africa’s total assets increased by 19.3% from Ksh.5.18 billion to Ksh.6.17 billion.

In anticipation of a high dividend payout at the end of the year, the demand for Pan Africa shares ion the bourse outstripped the supply pushing the share price up by 7.3% to stand at Ksh.75 per share. The demand on this counter is expected to stay high for a while.

Highlights
• Gross premium income up 20% and exceeds Ksh.1 billion
• Corporate Business premiums up 44% to Ksh.430 million
• Over 429,000 lives now covered by Pan Africa Life
• Embedded Value up by 16% to Ksh.2.9 billion
• Total asset exceed ksh.6 billion

Accounting Policies
The Group accounting policies comply with International Financial Reporting Standard (IFRS) as well as the Kenya Companies Act. These policies are consistent with those applied in prior periods.

Business Environment
The first half of the year has seen a difficult business environment. The average annual overall inflation increased from 9.8% in December 2007 to 18.5% in June 2008. The NSE share index fell by 5% during the period to close at 5,185 on 30 June 2008. During the period there was upward pressure on interest rates with interest on the 91 day treasury bill rising from 6.8% in December 2007 to an average of 7.7% in June 2008. the Kenya Shilling weaken against the US dollar losing 2.1% to close at Ksh.64.60. it is expected that most of these pressures will continue into the second half of the year.

Results
Premium income has grown by 20% while profit from our core operation has increased by 28% to Ksh.128 million. The profit after tax increased to Ksh.236 compared with Ksh.26 million in the same period last year. This is mainly attributed to good performance by the Life business and unrealized investment returns from our insurance associate APA Ltd.

Compared to30 June 2007 the Embedded Value, which is a primary measure of value of Life Company, has increased by 16% to reach Ksh.2.9 billion. This result already reflects the full impact of the changes to the tax basis for life insurance companies which take effect on January 2009.

Operating Review
We opened new branches in Westlands-Nairobi, Naivasha and Voi, which have already recorded good sales in the first months of operation. We are targeting to open additional branches before the end of the year. In corporate business, the group introduced a retirement annuity product in May this year. The product has been received very well in the market and the sale achieved so far are encouraging. We are re-launching our funeral product with additional benefit in the second half of the year.

Dividend and Closure of Share Register
Consistent with the company’s dividend policy, the board does not recommend the payment of an interim dividend.

Prospects
We expected the trading conditions to remain challenging, but the Group is committed to building on current achievements and to focus on key strategies for growth and profitability.

Source: NAIROBIST