The Board of Kenya Reinsurance Corporation described Hillary Wachinga as “a multi-skilled strategic thinker with over 17 years of proven work experience in risk management, compliance and auditing” when they unveiled him as the new managing director in late March.
Dr Wachinga replaced Jadiah Mwarania at the helm of Kenya Re, the region’s oldest reinsurance firm with a reach of more than 60 countries in Africa, the Middle East and Asia.
He spoke with Business Daily about his appointment and vision for the reinsurer.
I started my career at Deloitte where I was an external auditor. Then I went into the banking industry where I held several roles.
I was an internal audit manager, risk manager, and deputy head of special projects before I came to the insurance sector where, again, I was head of audit and risk.
What prepared you for this role?
At Kenya Re, our culture is very good. I have been very lucky, just like I was in the banking sector, to work in multiple departments.
I had a solid background that prepared me for this [position]. At Kenya Re, I have been lucky to report to the board from the time I came in August 2012.
While working in those departments I interacted a lot with the internal staff. There is a very supportive culture here.
Again, a lot of support from the board and the board believes that internally, you have quality managers who can successfully continue running the company.
Do you think being an insider gave you an edge over other candidates?
The insider tag may be overstated. This was a very competitive interview process. We started with 53 candidates. The list narrowed down to 31, then 12. It went down to six…then three and finally to one.
It [recruitment process] started in December and ended in March. It was a very competitive process, open to all and the majority of applicants were external.
What qualities does one need to lead a team which comprises members who may have been your seniors in the previous structure?
You need to have emotional intelligence. You need to balance and also appreciate that these are your colleagues, some of them are much older and more experienced, and they bring in a lot of value.
At the same time, you need to appreciate you have very young ones, including those who have just left university who also need to be listened to.
The approach here is to be tolerant, listen to all, appreciate all and lead by example. You should be able to promote team hegemony. I am a believer in teamwork, team play and participation.
It is God’s favour to be chosen to lead this great team. I am a servant leader. I have a listening ear and am ready to extend my capability to them and complement their skills and experience.
With that, I believe this corporation will go far.
What are your immediate targets this year?
We want to grow our income from our investments, including properties. We have rental properties and we intend to grow that [income] this year.
Our revenue target this year is to grow rental income before the end of this year to almost Sh1 billion and investment income to a minimum of Sh8.5 billion.
We also intend to grow our underwriting profitability, which has been dwindling because of the market behaviour.
Depending on the risk profile of the people we have reinsured we might return [underwriting] profit or loss. That [underwriting profit] is unpredictable but for rental income, we have control.
How do you plan to tackle risks to your growth strategy?
We are aware of what may go wrong and we are up to the task to control the risks that may prevent us from hitting those targets.
Kenya Re has a presence in many countries. What are we likely to see in terms of product offering and market expansion?
We intend to continue diversifying by product and region. We have a wide offering of products well distributed in Africa, the Middle East and Asia.
We have a physical presence in Zambia, Ivory Coast and Uganda. We may continue expanding our scope, including venturing into new markets.
Besides that, we want to continue optimising the utilisation of our resources in the subsidiaries.
We have invested heavily in those subsidiaries and want some of them to have extended mandates to get more business because they understand these markets better than us here in Nairobi.
How is climate change impacting how you design products?
Our biggest headache is climate-related risks. They are increasing across our key markets. We do prudent underwriting.
So, when those risks are extended to us, we have actuaries and a team of underwriters and, therefore, we can price accordingly.
We also have protection against such exposures. It factors in those exposures that may not be well predicted because of their uneven occurrence.
In a market like Africa where we may not be having better equipment to correctly predict such exposures, we have a retrocession programme to protect us. We extend the same protection to our insurance companies.
How difficult is it to price climate change risks?
We have the technical capacity to understand and price it accordingly. So we model, we predict and price accordingly. So what insurers pay as a premium to us has factored in those exposures.
How is the rising exposure to devastating climate change-related disasters such as floods and drought in Africa likely to affect pricing?
To some extent, we are likely to see an upward shift in pricing because the risk is looked at from the frequency of occurrence and severity.
So if we are going to see a lot of these happening all the time, then definitely we are going to review the way we are pricing it and appreciate the increased level of that risk.
Marginally we may revise the pricing, but not that much because we have experience in pricing this from other markets where we are.
What is your promise to shareholders?
Kenya Re is a very solid company. We have a very solid governance structure in Kenya Re. A great team of competent personnel who are watching over your assets.
We are doing everything to put more money in your pockets.
