Insurers rebound with first underwriting profit in 3 years

From Left: FORMER ICT Cabinet Secretary Fred Matiang'i, FORMER Insurance Regulatory Authority (IRA) CEO Sammy Makove and IRA web master Doreen Gitonga during the IRA website and electronic regulatory system (ERS) launch at the Hilton Hotel PAST EVENT. PHOTO/DIANA NGILA 

By JAMES NGUNJIRI

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Summary

• The profit stood at Sh556.1 million from a loss of Sh390.8 million in 2016 and Sh226.2 million in the previous year.
• Underwriting profit consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted.
• Net premium income increased by 4.81 per cent to Sh164.71 billion last year from Sh156.78 billion recorded during the previous year.

Insurers turned an underwriting profit in 2017 in general business, the first since 2014.

The profit stood at Sh556.1 million from a loss of Sh390.8 million in 2016 and Sh226.2 million in the previous year.

Underwriting profit consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted.

Overall net profit declined by 0.6 per cent to Sh11.04 billion compared to the year before.

Gross premium income grew by 6.23 per cent to Sh207.67 billion in 2017 from Sh194.73 billion in the previous year.

“Insurance premium growth slowed down during the one year period to December 2017 to 6.6 per cent compared to an annual growth of 12.3 per cent in a similar period of 2016,” Insurance Regulatory Authority (IRA) said in its annual industry report.

Net premium income increased by 4.81 per cent to Sh164.71 billion last year from Sh156.78 billion recorded during the previous year.

The IRA said insurance premium growth continues to be driven by the higher growth of 13.6 per cent in the long-term (mainly life) insurance business segment compared to a growth of only 2.5 per cent in the general insurance segment.

“Insurance premium stood at Sh207.68 billion by the end of the fourth quarter of 2017 with 60 per cent of the industry business comprising general insurance premium. The proportion of long- term insurance is increasing as a result of the higher growth in long-term insurance premiums compared to general insurance business,” said the IRA.

Medical insurance class of business recorded the highest gross premium written by general insurers at Sh38.4 billion followed by motor commercial (Sh22.7 billion) and then motor private (Sh21.05 billion).

Others were fire industrial (Sh11.4 billion), workmen’s compensation (Sh5.7 billion), engineering (Sh4.2 billion), miscellaneous (Sh3.9 billion), theft (Sh3.7 billion), marine and transit (Sh3.6 billion), personal accident (Sh3.6 billion), liability (Sh2.8 billion), aviation (Sh1.6 billion), and fire domestic (Sh1.5 billion).

There was a slight increase in the marine insurance class of business underwritten from Sh2.70 billion in 2016 to Sh3.63 billion last year.

In class-wise distribution of gross premium income written by long term insurers, pensions recorded the highest at 29.21 per cent followed by life assurances at 21.40 per cent.

Others were group life (12.93 per cent), annuities (9.84 per cent), group credit (5.06 per cent), and investments (4.54 per cent).

Investment income increased to Sh436.4 billion in 2017 from Sh385.5 billion recorded previous year.

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