Companies

Commercial Bank of Africa books Sh109m gain from insurer

Commercial Bank of Africa (CBA) has booked a Sh108.8 million gain for the year 2013 from insurance group AIG Kenya, being a profit share for its 33.3 per cent ownership in the company.

Newly released CBA annual report shows the earnings from AIG dropped 4.9 per cent last year, after the underwriter recorded lower profit.

AIG Kenya’s net profit shrank by a similar margin to Sh326.4 million last year compared to 343.1 million it made in 2012.

CBA earned Sh114.3 million from AIG Kenya in 2012.

The privately-owned bank has been banking on AIG Kenya and its wholly owned subsidiary CBA Insurance Agency Ltd to push its bancassurance business by selling new insurance products for its customers.

CBA, majority owned by the Kenyatta family, acquired the AIG Kenya stake in 2006 for Sh328 million.

Its own bancassurance and investment products unit offers cover policies such as motor, personal accident, credit protection insurance, education travel and life insurance.

“We have a strong bancassurance strategy and we’ve always been pushing it,” said CBA group managing director Isaac Awuondo.

The mid-tier lender’s earnings from AIG Kenya make up 2.9 per cent of the Sh3.7 billion net profit it reported last year.

CBA has earned Sh499 million in income from AIG Kenya in the last six years, highlighting the lucrative returns from the underwriting business that has now attracted a majority of Kenyan lenders.

Equity Bank made a pre-tax profit of Sh407 million last year from its insurance business, a growth of 22 per cent from Sh334 million in 2012. The bank has an underwriting subsidiary dubbed Equity Insurance Agency Ltd.

KCB Group, Kenya’s largest bank by assets last year re-launched KCB Insurance Agency which sells policy covers to its retail, mortgage and corporate clients. NIC Insurance Agents, owned by NIC Bank, posted a profit before tax of Sh31 million last year compared to Sh19 million in 2012.

AIG Kenya Insurance has been operating in Kenya since 1972 in the general insurance business. It is ranked Kenya’s tenth largest underwriter with a market share of 3.6 per cent and controlled premiums worth Sh1.5 billion as at March this year, data from the insurance regulator shows.

READ: AIG makes staff changes in its East Africa unit

AIG Kenya’s gross premiums have grown by three quarters to hit Sh3.5 billion last year from Sh2.03 billion in 2008 driven by increased uptake of insurance cover by small and mid-sized enterprises, individuals and microfinance. AIG Kenya is 66.7 per cent owned by New York-based AIG Inc. and the remaining shares by CBA.

AIG Kenya briefly changed its name to Chartis Kenya Insurance in 2009 in the wake of the global financial crisis that led to the collapse of the parent company in the US, which had to be bailed out by the American government. It reverted to AIG in 2012.

CBA opened shop in Uganda in January where it has a single branch in Kampala.  

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