Diversified financial services group Vunani, which is optimistic it will bounce back after Covid-19 hit its new insurance business, says it could make acquisitions in the coming months.
The pandemic hit the insurance industry hard, forcing companies to set aside cash as businesses were shuttered even as mortality claims rose, with Covid-19 also putting existing contracts and future business at risk.
Vunani, whose interests also include corporate advisory services, said the global vaccine rollout and a recent bump to SA’s exports are reasons for optimism, and it is seeing “numerous opportunities”.
Announcing its results for the year to end-February on Monday, Vunani said its new insurance business in Eswatini, Swaziland, experienced writedowns of R41.1m, larger than its acquisition costs, as it rethought its future profitability due to the pandemic.
Vunani acquired an effective 52% of Oracle Insurance Eswatini, previously Metropolitan Life Swaziland, in December 2019. It had paid R35m, though the acquisition had resulted in the recognition of a bargain purchase gain of R54.3m at the acquisition date.
Vunani reported a R159,000 loss for its year to end-February 2021, from profit of R39.46m previously, adding it is “cautiously optimistic that the performance of the past year can be turned around and that it can fuel growth in the immediate and long-term future”.
Though economic conditions were difficult an improvement in global trade, as vaccines are rolled out, has allowed for a recovery of trade boosting SA’s exports, Vunani said. Global markets have also been buoyed by stimulus measures, the group added.
“Despite the impact of Covid-19 on the economy, the group continues to see numerous opportunities in the market.”
The group said Eswatini was hit hard in its second wave of Covid-19, with deaths significantly higher year on year.
The insurance segment was affected by significant negative fair value adjustments to its insurance liabilities of R67.9m, from R4.2m previously, as well as writedowns of R41.1m to reflect the effects of the pandemic on the future profitability of the business, Vunani said.
Revenue from continuing operations for the group increased 62% to R558.7m to end-February, partly due to a full-year contribution from Oracle, which only contributed three months in the previous year.
Vunani, valued at R467m on the JSE, declared a 7.5c final dividend, equating to about R12m, having not paid one previously.
The group had cash of R195.75m at end-February, down about 17% year on year.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.