Insurer’s bonus dividend sees stock gain by 14.2pc
What you need to know:
- The firm’s full year performance was hit by a slump in unrealised gains in unlisted equities and under-performance of property sales.
- “Investment income on shareholders’ assets declined by 34 per cent mainly due to decrease in unrealised gains in unlisted equities compared to 2013. Demand for our property was depressed in 2014 compared to 2013 but we expect this to pick up again in 2015,” the firm said.
Pan Africa Insurance’s share price gained the most last week despite reporting a decline in profit after tax for the full year 2014.
The insurer, on Friday, reported a 30 per cent decline in full year profit after tax to Sh872 million from Sh1.25 billion recorded in 2013.
Its share price on the Nairobi Securities Exchange, however, gained the most by 14.29 per cent to Sh120 apiece as at the end of trading on Friday, February 27, from Sh105 a week earlier on positive investor sentiment following a bonus dividend issue.
“This is in lieu of a cash dividend as we will utilise the surplus cash on our new office development and the acquisition of Gateway,” the management said upon releasing of the firm’s 2014 results.
This comes a week after the insurer, which is controlled by South Africa’s Sanlam, issued a profit warning, saying its full year earnings for 2014 could drop by at least 25 per cent.
UNREALISED GAINS
The firm’s full year performance was hit by a slump in unrealised gains in unlisted equities and under-performance of property sales.
The firm, however, said that its three business divisions — life, asset management and loans — exceeded the comparative 2013 operating profit.
“Investment income on shareholders’ assets declined by 34 per cent mainly due to decrease in unrealised gains in unlisted equities compared to 2013. Demand for our property was depressed in 2014 compared to 2013 but we expect this to pick up again in 2015,” the firm said.
Analysts said the insurer’s price on the stock market received support from positive investor sentiment after the insurer declared a bonus dividend of one share for every two held.
