HakiPensheni

By JOHN NJIRU jnjiru@ke.nationmedia.com

In Summary

• A number of insurers are now going into property and real estate to increase their asset bases while others are turning to offering a wider range of financial services
• British-American, synonymous with underwriting for long, has re-branded to Britam to accommodate its wide range of financial services
• CIC Insurance Holdings chief executive Nelson Kuria says the profits from underwriting, especially for general insurance, have been plummeting and many insurers have been surviving on investment income, especially from the capital market

Local insurers are diversifying their investment portfolios to get better returns for shareholders as the traditional underwriting business takes a beating.

A number of them are now going into property and real estate to increase their asset bases while others are turning to offering a wider range of financial services.

What were traditionally underwriting companies are becoming conglomerates as they encompass other services, such as asset and risk management.

British-American, synonymous with underwriting for long, has re-branded to Britam to accommodate its wide range of financial services.

The change, according to its group managing director Benson Wairegi, will broaden its perception among the public as a global financial entity, compared to the Britak brand which is synonymous with insurance business only.

“We now regard ourselves as a financial service group, not just an insurance company,” he said. Britam has invested Sh300 million of its assets in pension scheme services, unit trusts, fund management, and investment advisories.

CIC Insurance Holdings chief executive Nelson Kuria says the profits from underwriting, especially for general insurance, have been plummeting and many insurers have been surviving on investment income, especially from the capital market.

Performance of the bourse, which took a hit during last year’s financial meltdown, has seen insurers seek other investment portfolios.

“The stock market, especially the equities, declined to 50 per cent during the global financial crisis. This not only affected the profits but also the solvency of insurers. After the bad experience, insurers have been prompted to focus on diversification of their investments,” he said.

He says his firm’s latest investment is in buying land in Kiambu County to set up buildings and construction of residential properties in Kitengela.

Returns to policy holders

Insurance companies usually earn their profits through investing in sound schemes apart from underwriting as some products they distribute incorporate a guaranteed return to the policy holder.

“We have seen how volatile our NSE can be, so it is natural for companies to diversify their investment portfolio. We have diversified into developing and selling residential property in Runda. We have, however, maintained significant investment in equities and bonds at the bourse,” said Pan African Insurance Holdings chief executive Tom Gitogo.

Jubilee, UAP, and CFC Insurance Holdings are other players in the market with a widened diversification in their financial services, apart from underwriting.