Kenya Re net profit down 12 per cent

Moses Omusolo  Kenya Re Managing Director Jadiah Mwarania. Regional reinsurer Kenya Re has reported a 12.5 per cent drop in half-year profit for the period ending June 30, 2019, on increased insurance claims and costs. The reinsurer saw its net profit fall from Sh1.23 billion in the same period last year to Sh1.08 billion. "Net claims in the period grew 49 per cent from Sh3.3 billion to Sh4.9 billion as operational expenses jumped 23 per cent from Sh6.5 billion to Sh8 billion as at June 30," Kenya Re Managing Director Jadiah Mwarania. Some of the big claims came from Ethiopian Airlines plane crash and the Dusit terror attack, where the firm paid Sh42 million and Sh44 million respectively. It also paid Sh44 million as claims for floods in Asian countries. Mwarania said the unfavourable investment climate in the region has seen the reinsurer struggle in markets it previously dominated such as Uganda and Egypt, which have since implemented tough rules for foreign operators. SEE ALSO :Acting Kenya Re CEO risks jail over contempt
He said the business in Egypt was shaken when the regulations required both a favourable rating and higher paid-up share capital. "Despite this, we are back to business and we expect up to Sh300 million in written premiums,” he said. The firm said competition is growing stiff in key markets such as Uganda and Zambia, where national reinsurers have been set up. This has forced the corporation to relook at its investment strategy and is set to spend more on growing market share. "Domestication of insurance is a growing challenge to our business. However, our strategy is to set up regional offices in countries such as Uganda to protect our business there,” said Mwarania. Gross written premiums grew by 40 per cent from Sh6.3 billion to Sh8.8 billion. Investment income grew two per cent from Sh1.90 billion to Sh1.94 billion attributed to improved yields from government securities and fixed deposits.