Old Mutual Holdings Plc, a regional insurer, has exited the short-term insurance market in Tanzania by selling its subsidiary, Insurance Tanzania, for Sh73.5 million.

 This decision comes after the unit failed to meet the expected return on capital.

UAP Insurance Tanzania, acquired in 2015, struggled with weak operating metrics.

To reflect this, Old Mutual offered the unit to Strategic Ventures Company Limited at a discount based on its net assets at the end of 2023.

This translates to a valuation of Sh122.5 million, which is 50 per cent of the unit's net assets.

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"The value of UAP Insurance Tanzania has been determined as 50 per cent of its net assets as of 31 December 2023 in line with the agreed upon transaction price and the recoverable amount is therefore 60 per cent of that amount," Old Mutual stated in its annual report, highlighting the discounted sale.

While UAP Insurance Tanzania narrowed its loss from Sh265.4 million in 2022 to Sh191.8 million in 2023, it continued to grapple with negative net revenues from insurance due to high insurance services expenses.

Despite this exit, Old Mutual maintains its commitment to expanding in East Africa.

The company plans to collaborate with local entities to offer its products and services in the region.

"East Africa remains a key growth node for the Old Mutual Group and therefore we remain committed to the future of East Africa markets," the company emphasized.

"We returned our primary operations to the African continent in 2018 because we saw opportunities for growth."

This commitment is reflected in Old Mutual's presence in Uganda and South Sudan through subsidiaries like UAP Old Mutual Insurance Uganda Limited and UAP Properties Limited (South Sudan).

Overall, Old Mutual's financial performance improved in 2023.

The group narrowed its loss to Sh113.8 million from a significant loss of Sh2.2 billion in 2022.

This improvement stemmed from a rise in insurance revenues and total investment income.

However, higher operating expenses caused total expenses and commissions to increase as well.