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Insurance industry shareholder funds increase by 6.5pc

ACTING CEO OF THE INSURANCE REGULATORY AUTHORITY GODFREY KIPTUM (RIGHT) AND DANIEL KIANGE, MANAGER TRADE FACILITATION AT KENTRADE. FILE PHOTO | NMG
ACTING CEO OF THE INSURANCE REGULATORY AUTHORITY GODFREY KIPTUM (RIGHT) AND DANIEL KIANGE, MANAGER TRADE FACILITATION AT KENTRADE. FILE PHOTO | NMG   

Insurance industry equity grew 6.5 per cent to stand at Sh141.25 billion as at end of June this year from Sh132.68 billion reported in the first half of 2016.

This has been attributed to capital restructuring following the changes in regulatory capital requirements.

Data from the Insurance Regulatory Authority (IRA) indicates that some of the key components of shareholders’ funds were retained earnings at 36.4 per cent, paid up capital at 29.7 per cent and statutory reserves at 14.9 per cent.

Others were share premium at four per cent, revaluation reserves at 3.2 per cent and other reserves at 11.7 per cent.

Under the new law, general insurance companies are required to have at least Sh600 million as capital, while life insurers must be capitalised to the tune of Sh400 million.

A firm that combines both life and general businesses (composite insurer) is required to raise its level of capitalisation to at least Sh1 billion.

But industry analysts say the current insurance business model is not profitable as depicted by the high expense and loss ratios.

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