Insurer Sanlam has served its employees with a voluntary early retirement program (VER) hinting at impending job cuts at the consolidating firm.
The retrenchment program which runs to October 3 is targeted at staff members above the age of 50 and ties up to the insurer’s ongoing squeeze for operational efficiency.
“We are now in a competitive environment which requires us to be nimble. Costs are what management can control on the board as the outside is uncontrollable,” said Sanlam Kenya Chief Executive Officer Patrick Tumbo on Thursday.
Sanlam seeks to rationalize staff within its life and general insurance business to cover 193 employees whose average age currently picks at 35.
On the greater scheme of affairs, Sanlam says it is keen to cut big by an annual figure of Ksh.200 million.
“This is part of a bigger strategic initiative around our expenses to create more efficiency on our expense base,” reckoned Sanlam Chief Financial Officer Kevin Mworia.
The ongoing squeeze for efficiency by the insurer is anchored on the resumption of the insurer’s profitability following the shocking depletion of earnings in 2018.
Sanlam sunk to its first loss in 15 years at Ksh.1.97 billion largely from the impairment of its corporate bond investments in three firms among them the Athi River Mining Company (ARM) to trigger the push towards the consolidation of operations.
At the close of December 2018, staff costs which mainly entailed the settlement of salaries and short-term benefits came in at Ksh.942.8 million or an equivalent 52.8 percent of total operating costs.
Sanlam is expected to value the submissions of the voluntary early retirement program before making its pronouncement on further staff layoffs by the close of October.
Staffers who opt for the early retirement scheme will receive incentives including the 30 percent discounting of existing loans accruing back to the insurer and the payment of a month’s salary for every three years of service.
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