Old Mutual Insurance Counts Losses on South Sudanese Properties

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(JUBA) – A significant drop in the value of South Sudan based properties has hit regional insurer Old Mutual Holdings, with depreciation driven largely by the strengthening of the Kenyan shilling against the US dollar. The revaluation affected major assets in Juba, including Equatoria Tower and Juba Apartments, effectively exposing the risks faced by South Sudan’s property sector when regional currencies fluctuate.

Old Mutual reported a combined loss of KSh 2.1 billion (approx. SSP 9.8 billion or USD 16.3 million) across its property holdings in both South Sudan and Uganda by the end of 2024. These losses contributed to an overall 18.7 percent decline in the value of its foreign property assets, which dropped from KSh 11.3 billion to KSh 9.2 billion.

Equatoria Tower, one of Juba’s most prominent commercial buildings, was revalued to KSh 3.6 billion in December 2024, down from KSh 4.47 billion a year earlier. This reflects a depreciation of 19.5 percent, equivalent to SSP 16.7 billion or USD 27.8 million.

Similarly, Juba Apartments were valued at KSh 513 million in 2024, down 17.5 percent from the previous year’s valuation. This translates to SSP 2.38 billion or USD 3.97 million.

Old Mutual’s Chief Financial Officer, David Muchai, said the decline was not due to deterioration in the buildings themselves but rather due to currency conversion effects.

“These properties are valued in US dollars. With the Kenyan shilling gaining strength in 2024, the book value of these dollar-held assets appears lower when converted,” he noted.

The Kenyan shilling appreciated by 17.5 percent against the US dollar during 2024, aided by the repayment of a Eurobond, the Central Bank of Kenya’s decision to raise interest rates, and increased investor activity in the bond market. Since Old Mutual used US dollar-denominated loans to finance these properties, the firm has continued to account for them in dollars.

In Uganda, Nakawa Business Park was revalued to KSh 4.36 billion, down from KSh 5.34 billion in 2023, a decline of 18.3 percent. The adjacent Nakawa House also dropped by 16.6 percent to KSh 420 million.

Despite the losses in Juba and Kampala, the appreciation of some Kenya based properties helped cushion Old Mutual’s total real estate portfolio. Old Mutual Tower in Nairobi rose slightly to KSh 5.57 billion in 2024, while Kimathi House gained 11.3 percent to KSh 1.46 billion.

The total value of Old Mutual’s property holdings declined from KSh 23.4 billion in 2023 to KSh 21.3 billion in 2024. However, the depreciation was partially offset by an increase in rental income, which rose to KSh 1.34 billion from KSh 1.24 billion the previous year. After deducting KSh 224 million in operational expenses, the net rental income grew by 6.8 percent to KSh 1.12 billion.

Yet, the insurer’s high exposure to real estate investments remains a concern. According to GCR Ratings, property investments accounted for 98 percent of Old Mutual’s capital in 2024, limiting its ability to improve its credit rating.