Kenya Reinsurance Corporation (Kenya Re) yesterday announced a 20 per cent growth in half-year net profit on the back of rising premiums which it seeks to further increase through the lucrative oil and gas sector.
The listed reinsurer reported a Sh1.5 billion after-tax profit, up from Sh1.24 billion in a similar period last year. Its gross written premiums grew by 26.5 per cent to Sh6.2 billion driven mainly by contribution from overseas markets which produced more than half its underwriting business.
“This growth was achieved due to aggressive marketing efforts in the international market where there is bigger growth opportunities,” said chief executive Jadiah Mwarania.
The reinsurer said it is building capacity and expertise in the nascent oil and gas sector in the country. Mr Mwarania said his firm currently has a capacity of Sh300 million per risk.
The Shariah compliant Re-Takaful business was a key driver of the business with the reinsurer having collected an estimated Sh100 million through the product in the period.
Kenya Re is also setting up a subsidiary in Zambia to help it serve the southern Africa markets. The reinsurer in addition operates a subsidiary in Ivory Coast which serves the West African and Francophone markets.
The company has a business presence in more than 62 countries and reinsure 265 insurance companies in Africa, Middle East and Asia. Contribution by markets abroad has been growing to exceed the 50 per cent mark from 46 per cent in 2013 and 38 per cent five years earlier.
The company said it is yet to start benefiting from the recent increase in the mandatory business which insurers must cede as, change was done after most treaties were renewed. The government now requires all insurers to book 20 per cent of their reinsurance business with Kenya Re up from the previous 18 per cent.
The reinsurer’s claims rose by 29 per cent to Sh2.1 billion.
Mr Mwarania noted the company was managing its claims by checking the business that it took, especially from high-risk classes such as medical. Under medical, the reinsurer has a loss participation clause that requires the insurer to bear some of the loss when the claims exceed a specified mark, mostly 80 per cent.
Kenya Re’s investment income grew by six per cent to Sh1.43 billion from Sh1.33 billion riding on capital gains from equities and interest from fixed-income instruments and rent.
The management said it was getting an average of 11 per cent return on government securities and fixed cash savings held by banks.
The reinsurer had Sh8.7 billion invested in Treasury bills and bonds and Sh6.9 billion held in banks.
Kenya Re indicated its equities portfolio shrunk by Sh13.4 per cent to Sh2.8 billion following a slump at the Nairobi Securities Exchange.