AAR Plans To Quit Tanzanian Market Over Financial Difficulties
Healthcare insurer, AAR, has announced intentions to wind up its business in Tanzania citing financial difficulties.
In a memo seen by this writer to employees, AAR Healthcare (Tanzania) Ltd acting Chief Executive Officer, Andrew Rowell said the company’s board of directors had resolved to initiate a creditors’ voluntary wind-up process as the insurer was unlikely to meet its obligation to stakeholders.
The AAR boss noted that the company’s parent, AAR Health Care Holdings Limited, as a major creditor to the Company, is no longer willing to support the financial requirements of the company hence the decision to exit the market.
“Due to these difficulties, compounded by the fact that the model regarding NHIF has not worked in Tanzania coupled with the impact of the pandemic (Covid-19) and the resultant reduced numbers to our clinics, it is unlikely that it will be able to meet its obligations to its various stakeholders including employees and creditors in a timely manner,” Rowell said in the memo dated March 25.
The company is expected to hold a meeting with creditors on April 22 to formally appoint a liquidator.
“The Company’s business operations will continue as normal, pending the decision of the creditor’s meeting,” he added.
“As such, your employment remains with the Company under the terms and conditions of your misting contract of employment, unless notified otherwise.
“I wish to thank you all personally for your loyalty to the Company and sincerely regret that the creditors are being forced into this pending decision. It is certainly not due to the fault of our employees’ efforts but mainly the economic environment.”
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Back in Kenya, the company has also been struggling in what the management has partly attributed to effects of Covid-19.
In 2020, AAR Kenya posted Sh234 million profit after tax, a 55 per cent decline compared to the Sh517 million profit after tax posted in the previous year.
The insurer attributed the dip in profits to a tough operating environment, coupled with a surge in claims due to the Covid-19 pandemic.
Net claims and policyholders’ benefits rose 54.2 per cent to Sh2.59 billion from Sh1.68 billion the previous financial year.
The company paid out close to Sh200 million in Covid-19 claims alone in 2020.
“2020 was an extremely challenging financial year given the sudden shocks of the new coronavirus health crisis which significantly affected our bottom line given impact on many employers and families,” said AAR Insurance Kenya Managing Director, Nixon Shigoli.