Kenya Re set raise holdings in Treasury bonds

Kenya Reinsurance Corporation Limited Managing Director Jadiah Mwarania. FILE PHOTO | NMG 

By BRIAN NGUGI

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Summary

• Kenya Re made little change in its investment mix portfolio in the first half of the year, where government securities comprised 47 per cent on its investment book — and 39 per cent of total assets — in the half year period ended June 30 this year.

Kenya Reinsurance Corporation (Kenya Re) says it will boost its holdings of government securities as it chases guaranteed returns in an uncertain economy.

The Nairobi Securities Exchange (NSE) listed re-insurer made little change in its investment mix portfolio in the first half of the year, where government securities comprised 47 per cent on its investment book — and 39 per cent of total assets — in the half year period ended June 30 this year.

This investment resulted in a 14 per cent expansion of its total income to Sh1.9 billion in the half year ended June. The firm’s total assets stood at Sh42.9 billion by June, of which Sh16.7 billion were held in government securities and Sh1.7 billion quoted shares.

“Our strategy is to focus on real time diversification to government securities with competitive coupons,” said chief executive Jadiah Mwarania (pictured) on Friday.

“We will also step up market intelligence on quoted equity instruments for realisation of capital gains besides adopting strategic exposure to companies with high dividend pay-out,” he said. Kenya Re posted a 24.19 per cent drop in net profit in the half year ended June, weighed down by a decline in its gross written premiums. Its net profit stood at Sh1.22 billion in the period compared to Sh1.62 billion the year before.

READ: Kenya Re half year profit drops 24.1pc to Sh1.2bn

In 2017, yields on government securities outperformed inflation, which averaged eight per cent.

The yield curve ranged from eight per cent for three-month Treasury bills to 13.5 per cent for long term bonds maturing in more than 20 years.

In the equities market, share prices rebounded starting the second quarter of 2017 after a prolonged slump, with the NSE 20 Share Index eventually closing the year 16.5 per cent up and the NSE All-Share Index (NASI) gaining 28.4 per cent.

However, the market has had mixed performance this year, gaining in the first quarter before retreating in the second.

At the close of trading on Friday, the NSE 20 share index was 11.2 per cent down on a year to date basis.