Markets & Finance

Kenya Re profit up 16 p.c amid double digit sector gains

kenya re

The Kenya Re headquarters in Nairobi. Photo/ANTHONY KAMAU

Kenya Reinsurance Company grew its profits by 16 per cent in 2010 as a result of premium growth from new contracts and better performance of its investment portfolio.

Profit after tax grew to Sh1.5 billion in the year ending December 2010 compared to Sh1.3 billion in the previous year.

Gross premiums grew by almost one billion from Sh3.8 billion in 2009 to Sh4.9 billion the previous year while the investment income grew from Sh1.1 billion in 2009 to Sh1.7 billion in 2010.

Gross claims were up 12.2 percent at Sh2.19 billion.

“Our plan is to continue growing premiums by focusing on new markets and deepening our penetration in markets that we already operate in,” said Kenya-Re’s CEO Jadiah Mwarania.

He said prospects for new business are high in Angola, Mozambique and Botswana.

Kenya-Re has a presence in 23 African countries and 11 countries in the Middle East and Asia.

He said the company will also seek to work with all insurance companies in the markets it operates in, a model that it pursues in Kenya albeit with state support.

“In a country like Uganda, we are working with 14 insurance companies but the plan now is to work with all the 18 companies,” he said.

Kenya-Re currently underwrites business for all the 47 insurance companies in Kenya, which are by law required to cede 18 per cent of their reinsurance to the company up to 2015, accounting for 40 per cent of Kenya-Re’s gross premium income.

The company announced plans to start a microinsurance line to tap into the growing microinsurance underwriting business especially in agriculture.

Kenya-Re said it will also set a dedicated Takaful (Shari’ah compliant insurance) as the insurance model grows in East Africa.

The company already has Takaful insurance in Sudan where all the insurance companies offer Takaful products.

Growth will also be driven by tripling of the mortgage lending, which shot from an annual Sh100 million to Sh300 million starting January 2011.

“Mortgage will remain our non-core business, but we want to continue to tap its good returns, we have also decided to increase the amount we lend because the cost of construction has gone up,” said the CEO in an interview.

Kenya-Re is expected to continue riding on local insurers to increase penetration from the current 2.9 per cent of the gross domestic product although inflation could slow uptake.