Regional insurer Old Mutual Holdings Plc has sold its Tanzanian subsidiary, Insurance Tanzania, for Sh73.5 million, a discount to the unit’s valuation by net assets.
The sale of the unit, which was rubber-stamped at the company’s annual general meeting on Thursday, was occasioned by various challenges including failure to meet the expected return on capital.
UAP Insurance Tanzania was a short-term insurance business acquired in 2015 as part of the group’s East African growth strategy.
Based on the weak operating metrics, Old Mutual offered a discount to the buyer, Strategic Ventures Company Limited based on the unit’s net assets for the period ended December 31, 2023. “The value of UAP Insurance Tanzania has been determined as 50 percent of its net assets as of 31 December 2023 in line with the agreed upon transaction price and the recoverable amount is therefore 60 percent of that amount,” Old Mutual notes in its annual report.
UAP Insurance Tanzania had net assets of Sh245 million at the end of December 2023.
The unit posted a narrower loss of Sh191.8 million from a loss of Sh265.4 million in December 2022.
UAP Insurance Tanzania closed the same period with negative net revenues from insurance at Sh216.9 million after being bogged down by high insurance services expenses.
Old Mutual East Holdings Plc which is a subsidiary of Old Mutual East Africa Holdings Group owned 60 percent of UAP Insurance Tanzania Limited via its 100 percent stake in UAP Africa Limited.
Its shareholding in the Tanzania unit was made up of 137,400 ordinary shares and 100 percent of the unit’s preference shares.
Old Mutual says it is still keen on expanding into the region despite its exit from the short-term insurance business in Tanzania.
“Whilst divesting from the short-term insurance business in Tanzania, we plan to collaborate with local entities to extend our product and service offerings in the region,” Old Mutual added.
“East Africa remains a key growth node for the Old Mutual Group and therefore we remain committed to the future of East Africa markets, in 2018, we returned our primary operations to the African continent because we saw opportunities for growth.”
Old Mutual has other subsidiaries in Uganda and South Sudan including UAP Old Mutual Insurance Uganda Limited and UAP Properties Limited (South Sudan).
The company posted a narrow loss of Sh113.8 million in the year ended December 31, 2023, compared to a loss of Sh2.2 billion in 2022.
The improved performance for the Group was anchored on a rebound in its insurance service result as insurance revenues hit Sh32.6 billion from Sh28.4 billion.
