Ethiopian Airlines crash, Dusit attack hit Kenya Re profit

Kenya Re Managing Director Jadiah Mwarania. FILE PHOTO | NMG 

By BRIAN NGUGI
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Summary

• Kenya Re posted a 12.4 percent drop in net profit in the half-year ended June weighed down by an increase in the claims.

Claims relating to the Ethiopian Airlines crash of Sh41.4 million made to an undisclosed insurer by the Kenya Reinsurance Corporation (Kenya Re) contributed to a 48.57 percent jump in net claims, clawing into the half-year take-home.

Kenya Re

posted a 12.4 percent drop in net profit in the half-year ended June weighed down by an increase in the claims.

The Nairobi Securities Exchange (NSE)-listed reinsurer’s net profit stood at Sh1.08 billion in the period compared with Sh1.23 billion the year before.

This came as net earned premiums jumped 16.6 percent to Sh7.42 billion.

Chief executive Jadiah Mwarania said on Friday the reinsurer also incurred property damage linked claims amounting to Sh44 million in the recent terrorist attack on dusitD2 hotel and business complex in Nairobi further squeezing its earnings.

“We expect some more (claims) on life,” he said at an investor briefing in Nairobi on Friday in reference to the dusitD2 claims.

Other claims incurred in the period include Sh72.5 million owing to last year’s severe floods affecting the south Indian state of Kerala and Sh34 million in relation to Standard Media Group, Mr Mwarania said.

Kenya Re, which offers cover to more than 160 insurers in over 45 countries in Africa, the Middle East and Asia, saw its gross written premiums go up to Sh8.85 billion in the period, slightly higher than the Sh6.33 billion in the previous period.

He said the firm has set a year-end deadline to open a subsidiary in Uganda in the face of stiff competition, adding that the decision by countries such as Uganda, Tanzania and Ethiopia to set up own reinsurers had eaten into Kenya Re’s market share.

Mr Mwarania said Kenya Re would distribute two billion new shares to qualifying investors from this month.

Former East African Community PS Chiboli Shakaba has replaced David Kemei as chairman at the reinsurer. Mr Kemei, however, remains a director at the firm.

“I handed over to Mr Chiboli yesterday (Thursday) to facilitate a smooth transition,” Mr Kemei told the Business Daily in an interview.