Insurers post 45pc growth in earnings to Sh6.5 billion

Kenyan insurers posted a 45 per cent growth in profit for the nine months to September riding on investment income from long-term business, signalling an improved year for underwriters.

Data from the Insurance Regulatory Authority (IRA) shows that the industry net profit in the year to September was Sh6.5 billion compared to Sh4.4 billion posted in a similar period last year.

Life business was the key driver with its profits growing more than fourfold to Sh3.8 billion from Sh872 million while general insurers—also referred to as short-term business — saw their earnings drop 25 per cent to Sh2.7 billion.

Insurance premiums for general accidents also grew at a slower pace of six per cent compared to life business, which posted a 9.6 per cent increase.

“Insurance premiums during the third quarter of 2016 registered a year-on-year growth of 7.3 per cent compared to 12.8 per cent year-on-year growth registered in the third quarter of 2015,” said IRA in its quarterly industry report. 

Total industry premiums rose to Sh144 billion, Sh93 billion for the general business and Sh51 billion for long-term covers.

The Kenyan insurance market is dominated by general accident covers as they are mandatory under the law.

More than half of the general insurers, 23 of 37, posted underwriting losses during the nine-month period.

Ten of the 37 general insurers reported losses among them Cannon Insurance, which had the largest loss of Sh344 million.

Others in the red include First Assurance, owned by Barclays Africa, Pacis held by the Catholic Church, Invesco owned by the Matatu Owners Association, Fidelity Shield, Madison and Resolution.

GA Insurance, which is ranked 11th in terms of market share controlling 3.5 per cent of general insurance premiums, recorded the highest profit of Sh465 million.

APA Insurance ranked second with Sh363 million, Heritage was third with Sh363 million followed by listed Jubilee with Sh320 million.

Among life insurers Britam, which is listed on the Nairobi Securities Exchange, was the most profitable at Sh2.9 billion followed by Jubilee at Sh1 billion. Eight of the 26 life insurers recorded losses.

A total of Sh50.5 billion was paid out as claims by general insurers during the period, with medical being the largest recipient at Sh18.1 billion higher than private and commercial motor combined.

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Private motorists were paid claims worth Sh10.3 billion while commercials were paid Sh7.3 billion.

The private motor class recorded the largest underwriting loss of Sh1.7 billion followed by medical, which had a loss of Sh581 million.

Motor and medical classes have been the most affected by fraudulent claims, a vice which has been singled out as a key threat to the insurance industry.

The industry reported underwriting losses of Sh1.6 billion down from a profit of Sh513 million recorded in a similar period last year.

The insurance industry was expected to take a hit from revaluation losses arising from the bearish NSE market where they have invested 10.9 per cent of their portfolio.

A sluggish economy has also seen other sectors record slow growth with manufacturers and bankers being among the most affected, meaning in the period insurance was moving against the grain.