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UAP Holdings extends repayment period of former mutual loan of 6.5 billion shillings

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UAP Holdings extends repayment period of former mutual loan of 6.5 billion shillings


The UAP-Old Mutual Tower in Nairobi. PICTURES | COURTESY

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Summary

  • UAP Holdings will further delay payment of a 6.5 billion shillings loan from its parent company Old Mutual until June next year, marking the latest restructuring of the credit facility.
  • On February 5, 2021, it took a three-year loan of 2.8 billion shillings to Absa Bank to repay a short-term loan owed to Old Mutual Holdings Limited.

UAP Holdings will further delay payment of a 6.5 billion shillings loan from its parent company Old Mutual until June next year, marking the latest restructuring of the credit facility.

The maturity date of the loan, which was due in January this year, was extended several times to ease the financial burden on the insurer, which suffered losses.

“By mutual agreement with the directors of Old Mutual Holdings Limited, the maturity date of loans maturing in January 2022 totaling Sh6.5 billion has been extended to June 2023, with the directors making arrangements to settle the loan,” the PSU says in its latest annual report.

The insurer also restructured loans from other lenders while refinancing others.

On February 5, 2021, it took a three-year loan of 2.8 billion shillings from Absa Bank to repay a short-term loan owed to Old Mutual Holdings Limited, which had been used to repay $27 million (3 .1 billion shillings) due to Nedbank in 2020.

On the same date, UAP extended an existing bridge facility of 2.2 billion shillings owed to Stanbic Bank into a loan of 3 billion shillings.

PSU borrowing rose to 13.5 billion shillings in the year ended December, from 13 billion shillings a year earlier, while interest charges over the period increased to 1, 2 billion shillings against 1 billion shillings.

The insurer has a standby arrangement that allows it to access up to 8 billion shillings from Stanbic Bank in case it needs liquidity support. The installation will be available until the end of the year.

Increase in complaints

The insurer recorded a net loss of 1 billion shillings during the reporting period, reducing it by 1.3 billion shillings in 2020.

“The loss in 2021 is largely attributable to increased claims, particularly in the medical sector and fair value losses on investment properties, UAP said.

“As the negative impacts of Covid diminish and markets recover, directors expect these losses to be recovered.”

Its life business was particularly impacted by the increase in claims as the Covid-19 pandemic claimed more victims. Other insurers have also suffered increased claims due to the pandemic.

Losses in its P&C and life business wiped out profits made in the general insurance division over the past two years.

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