Kenya Reinsurance Corporation (Kenya Re) has posted a 4% rise in first-half pre-tax profit, to record Ksh 2.294 billion profit before tax compared to Ksh 2.212 billion last year. Profit after tax increased by 4% from Ksh 1.564 billion to Ksh 1.622 billion. This has been boosted by a 6% rise in gross premiums written even as net premium earned grew to 9%.
Gross premiums written grew by 6% from Ksh 7.096 billion as at 30th June 2016 to Ksh7.504 billion as at June 30, 2017. The Net Earned Premiums grew from Ksh 6.475 billion to Ksh 7.089 billion, which is a 9% increase. As of 30th June, 2017, the investment income stood at Ksh 1.707 billion compared to Ksh 1.739 billion in June 2016, a decrease of 2%.
The Asset Base increased from Ksh 38.494 billion in December 2016 to Ksh 40.736 billion in June 2017, a 6% growth. On the other hand, the shareholders’ funds went up from Ksh 24.133 billion in December 2016 to Ksh 25.908 billion in June 2017, a reflection of 7% growth.
The net claims incurred increased by 2% to Ksh 3.607 billion from Ksh 3.549 in June 2016. This is despite a 6% growth in the Gross Premium.
This comes a few months after the corporation was recognised by Cytonn Investments as the top listed insurance company from both an intrinsic and financial perspective. The key performance drivers responsible for the Corporation’s positive financial performance in the reinsurance business include increased focus on Retakaful business segment, strengthened cedant and intermediary relationships and market identification and segmentation, according to the Managing Director Mr Jadiah Mwarania.]
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“Today, our financial results encourage the strategic path the corporation has taken. Our business sustainability will be pegged on operational prudence, portfolio diversity as well as robust investment and risk management,” said Mr Mwarania.
Other factors include diversification of the business portfolio in chosen markets, effective and timely response to changing customer needs as well as prudent underwriting and business acceptance which equally contributed to the positive outcome.
Some challenges highlighted by the MD include premium undercutting in many insurance markets that continues to affect growth negatively and risk based capital regulations meaning that insurance companies are able to retain more risks.
Kenya Re’s chairman Mr David Kemei, who spoke during the release of the results cited premium investment prudence and diversification as key for the realisation of the forecasted increased income. “The results today reflect our enhanced investment earnings as a result of timely and lucrative investment in strategic high divided companies and government securities. This coupled with proficient management of all investment properties has enabled us to post a positive business outlook,” said Mr Kemei.
The corporation maintained a AA rating by Global Credit Rating (GCR) B+ AM best rating attributed to the firm’s enhanced risk practices, technological innovation, market growth driven and continued brand equity & visibility growth.
Separately, analysts have forecasted a 3.4% global growth in 2017 based on expected recovery from shocks such as Brexit in 2016. Sub-Saharan African growth is expected to pick up moderately to 2.9% in 2017.
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