Financial services provider Old Mutual has reported a sharp decline in its net profit, posting a 98 percent drop in earnings for the first half of the year. The firm’s profit stood at just Ksh 5 million compared to Ksh 249 million during the same period last year, weighed down by rising claims and higher operating costs.
The company’s insurance revenue slipped slightly, falling from Ksh 16.8 billion to Ksh 16.4 billion. On a brighter note, investment income recorded growth of 12.8 percent, climbing to Ksh 4.2 billion, reflecting improved returns from financial markets.
Despite this, escalating expenses eroded the bottom line. Finance costs jumped from Ksh 1.96 billion to Ksh 2.53 billion, adding pressure on the firm’s profitability. Commission expenses and other operating outlays surged 77.3 percent to Ksh 1.6 billion, underlining the cost challenges facing the insurer.
Even as profitability dwindled, Old Mutual strengthened its balance sheet. The firm’s total assets rose by 5.9 percent to Ksh 79.2 billion, largely supported by higher deposits in financial institutions. This reflects a strategic shift towards bolstering liquidity and capital buffers to navigate the challenging insurance landscape.
The steep fall in profit highlights the headwinds facing insurers in Kenya, with rising claims payouts and operational costs eating into earnings despite steady revenue streams. Analysts note that while investment income remains a key support, firms must address cost escalation and claims management to safeguard profitability.
Old Mutual’s performance comes at a time when insurers are under pressure to innovate, manage risks more efficiently, and adapt to a shifting regulatory and economic environment. The firm’s ability to leverage its asset growth and improve cost efficiency will be central to its recovery trajectory in the coming months.
