Jubilee Holdings net profit up 24pc on premiums rise

Insurance group Jubilee Holdings reported a 24 per cent jump in net profit for the year ended December, helped mainly by increased premiums.

The firm made a net profit of Sh3.1 billion in the review period, compared to Sh2.5 billion a year earlier.

Gross premiums increased 30 per cent to Sh30.3 billion, making the company Kenya’s largest in both general and life insurance business.

“We are delighted to also be the number one long term (life) insurer in Kenya for the first time,” said Nizar Juma, Jubilee’s chairman.

The company’s gross premiums in the long term business, including life assurances and annuities, stood at Sh11 billion as of December, according to data by the Insurance Regulatory Authority.

The performance saw it edge past Britam, which had Sh10.1 billion in premiums in the same insurance class.

Jubilee recorded double-digit growth in all its insurance operations including pensions and medical. The Nairobi Securities Exchange-listed insurer declared a total dividend of Sh8.5 per share, up from the Sh7 it paid on the 2013 results.

The company also declared a bonus share issue of one-for-every-ten held, a move that will see the allotment of 5.9 million shares and ultimately raise the volume of its outstanding stock to 65.8 million units.

Its share price closed at Sh559 in Tuesday’s trading at the stock market, an all-time high that signals investor confidence in the company.

The firm has pegged its growth strategy on expanding its market share in the local insurance industry besides property investments and potential acquisitions.

READ: Jubilee Holdings scouts for acquisition targets in Africa

Mr Juma said Jubilee continues to look for potential acquisition targets in the local and regional markets in the near term.

“We are definitely interested in acquisitions,” he said, adding that the company is in talks with three insurers in Kenya and East Africa to this end.

“What we are looking for are companies with the same high ethical standards as Jubilee,” he said, adding that the firm is interested in taking majority stakes.

Mr Juma noted that the rise of mergers and acquisitions in Kenya’s insurance market is set to define future performance of individual firms, with size being a major driver of premiums growth.

The local insurance sector has recorded at least six major deals in the past one year, with the latest being the acquisition of Cannon Assurance by South Africa’s Metropolitan & Momentum International Holdings.

Analysts attribute the increased acquisitions to institutional investors’ search for growth in the sector besides higher capital levels that they see driving even more consolidation in the near term.

The draft Insurance Bill 2014 demands higher capital levels that reflect an insurer’s risk profile, effectively ending the current flat buffers in favour of risk-based capital requirements.

Besides the potential acquisitions, Jubilee has also announced the development of residential and commercial properties in Uganda and Tanzania.

The Ugandan project will cost Sh1.8 billion while the Tanzanian one will cost Sh1.5 billion.

More insurers are investing heavily in the regional real estate market seeking high and stable returns.