Investment income lifts Jubilee’s profit by 17pc
Posted Wednesday, August 22 2012 at 19:15
Composite underwriter Jubilee Holdings Limited has announced a 17.3 per cent increase in its half-year profit, riding on higher investment income and improved efficiencies.
The company reported that its profit after tax grew to Sh666.1 million in the first six months of the year, up from Sh568 million recorded in a similar period last year.
Revenue from short-term business grew by 37 per cent to Sh8.1 billion from Sh5.9 billion in 2011, which the management attributed to focus on risk management, and introduction of new products targeting agriculture and small and medium-enterprise insurance.
The insurer’s long-term business grew by 21 per cent to Sh2.5 billion during the first six months, attributed to increased uptake of the listed regional insurer’s products.
One of Jubilee’s new products, tailor made for university students and dubbed ‘Baada Ya Campo’ (that helps them to save money for use after graduation and during the time they are hunting for employment) was a major driver of sales.
Investment income recorded a 47 per cent growth to Sh1.4 billion, underlining the opportunity arising from the high interest rate regime to corporates.
Businesses with huge cash deposits had the opportunity to invest in short-term government securities whose returns were on an upward trend in the second half of last year or invest the cash in commercial banks which were offering high rates for deposits.
Though the high interest affected insurance industry performance last year due to a slump in the equities market as investors took up money market products, the resultant interest income has lifted their performance this year even as the stock market picks up.
Apart from the insurance business Jubilee has diversified into power production, banking, tourism and food processing in Kenya and the wider East Africa market.
Jubilee is an equity partner in Kenya’s first independent power producer, Tsavo Power Company in Kipevu, which has increased the generation capacity by more than 20 per cent and the Sh72.2 billion ($860 million) Bujagali Power project in Uganda, which is now supplying that country’s national power grid.
With its affiliate IPS, Jubilee is a major investor in SEACOM – the first fibre optics submarine cable that stretches 15,000 kilometres from South Africa to France and provides communication to all the countries on its path.
On Wednesday Jubilee insurance share closed at Sh157 down from the previous Sh170.