Kenya Re H1 premiums up 14pc as profits almost flat

Money Markets

Mr Jadiah Mwarania, Kenya Re managing director. PHOTO | FILE 

By GEORGE NGIGI

In Summary

• Kenya Re has opened regional branches in Cote d’ivoire to search for business in West Africa and Zambia with a target of the South African market.

Kenya Re has posted a four per cent rise in profits for the six months ended June driven by new business.

The reinsurer  reported an after tax profit of Sh1.56 billion compared to Sh1.5 billion in a similar period last year.

Its gross premiums rose by 14 per cent to Sh7 billion as the company booked more business from its regional operations.

“Our Kenya business now contributes 48 per cent of premiums with 52 per cent being non-Kenyan,” said the company’s managing director Jadiah Mwarania.

Mr Mwarania noted that new capital requirements in the insurance industry had increased the ability of insurers to retain more risk reducing the amount of business passed on to reinsurers.

Data from Insurance Regulatory Authority shows that the industry retention ratio for general insurance had risen to 74 per cent in March from 70 per cent in a similar month last year.

Kenya Re has opened regional branches in Cote d’ivoire to search for business in West Africa and Zambia with a target of the South African market.

International business was cited for a 31 per cent rise in claims following two earthquakes in Nepal resulting in Sh450 million claims.

Claims

Kenya Re is set to recover Sh350 million of the paid amount from the insurers as its liability is capped at Sh50 million per event bringing its total burden to Sh100 million.

The reinsurer paid Sh3.5 billion in claims up from Sh2.7 billion in June last year.

Kenya Re disclosed it was in the process of issuing contract tenders for the construction of its Sh4.5 billion tower in Upper Hill, Nairobi.

The company has Sh8 billion in real estate mainly for rental return. Management said it has 97 per cent occupancy in its offices.

The listed reinsurer has invested Sh2.3 billion in other quoted shares which is an eight per cent drop from the Sh2.5 billion it held at the Nairobi Securities Exchange last year.

Management attributed the drop to recent bear run and a shift from the equities market in favour of government securities.

It has invested Sh10.2 billion in Treasury bills and bonds.

Kenya Re shares are currently trading at Sh19.90 each which is a 20 per cent gain in the last year. The counter has held steady in the past week when the market has witnessed a free fall in many counters following introduction of interest rate caps.

The government is the majority shareholder in the company with a 60 per cent stake limiting the stock liquidity in the open market. Kenya Re management disclosed it had asked government to consider selling some of its stake so as to boost activity on the counter.