Sanlam Kenya has issued a profit warning joining almost 15 companies at the Nairobi Securities Exchange to project a 25 per cent drop in net profits.

The insurance firm blamed the adverse effects of Covid-19 and currency losses which impacted the value of their assets for the slump.

Sanlam says it will now try to cut costs and push innovation including development of new products, digitization of the organization’s key business processes to cover lost ground.

Read also: Layoffs at Britam as insurer sends 140 staff home

“Based on our un-audited end-of-year financial results and information currently at the Board’s disposal, we wish to report that our projected net earnings after tax for the period ended 31st December 2020 will reflect a decline compared to the prior year earnings due to the effects of Covid-19 pandemic on the local economy and foreign exchange rates which had an adverse impact on the valuation of the Group’s net assets,” Sanlam Board Chairman, Dr John PN Simba said.

“In response to the challenging operating environment, the Board of Directors applied its focus on innovation and cost savings,” he said.

The coronavirus pandemic hit businesses hard reducing earnings due to limited hours of operations and wiping out customer spending power due to job losses and pay cuts across the industries.

Although the government offered a soft landing pad by cutting consumption, corporate and income tax the review of the taxes in January has hit consumers and corporates alike indicating a sustained after effects of the pandemic.

Some companies are adjusting by trimming their workforce and pushing more roles digital, delaying capital expenditure and targeting safe assets like dollars’ deposits and government bonds.

Regional insurance company, Britam, is set to send about 140 employees home in a cost-cutting measure just a month after the listed underwriter appointed Tavaziva Madzinga as the new group managing director.