Kenya Re shrugs off JKIA fire, Westgate to rake in Sh3bn

What you need to know:

Kenya Re’s profit after tax rose to Sh3.14 billion in the full year ended December 31, 2014, from Sh2.79 billion the previous year.
Net premiums hit Sh10 billion, a 20 per cent increase from 2014, while the reinsurer’s asset base rose 16 per cent to Sh32 billion.

Eastern Africa’s oldest reinsurer Kenya Re shook off a sharp increase in claims in 2014 to record a net profit increase of 12.5 per cent.

Audited results released Friday show Kenya Reinsurance Corporation’s profit after tax rose to Sh3.14 billion in the full year ended December 31, from Sh2.79 billion the previous year.

This was despite a 26 per cent increase in net claims to about Sh6 billion.

“We attribute this growth to strong investment returns and re-insurance premium growth,” said Managing Director Jadiah Mwarania.

Mr Mwarania said much of the money paid out during the period under review went to insurers holding the bag after the Westgate attack, the Jomo Kenyatta International Airport fire and torrential rains in Southern Thailand.

Net premiums hit Sh10.3 billion, a 20 per cent increase from the previous year’s Sh8.6 billion. The reinsurer’s asset base rose 16 per cent to Sh32 billion while shareholders’ funds went up 18 per cent to Sh20 billion.

As part of its expansion strategy, Kenya Re acquired a seven per cent stake in Uganda Re, while plans to set up a subsidiary in Zambia are at advanced stage. The new unit will act as a regional hub for Southern African markets.

This will be in addition to the reinsurer’s operations in Abidjan, Ivory Coast, which serves the West African and Francophone markets.

Kenya Re has also invested in African Trade Insurance Agency (ATI), acquiring ten shares worth Sh87.5 million in August last year. This partnership helped the reinsurer absorb most of the losses incurred during the Westgate attack.

ATI, a multilateral export and political risk agency, covers several risks including war or civil disturbance and losses due to events of war and terrorism, acts under which the Westgate attack lay claim.

The firm has also received retrocession treaties (cover by other reinsurers) which now gives them the risk muscle needed to deal in the energy sector.

The board has recommended payment of a first and final dividend of Sh0.70 per share (Sh490 million), as compared to Sh0.60 per share in 2013.