Firms take Sh85bn risk covers from insurer


African Trade Insurance Agency (ATI) chairman Dr Yohannes Birru. PHOTO | DIANA NGILA | NMG

Nairobi-based African Trade Insurance Agency (ATI) raised its exposure to risks in the Kenyan market by Sh1.9 billion last year, halting a two-year decline that had been informed by a need to diversify its geographical portfolio.

The agency says in its latest annual report that Kenyan exposure stood at $720.37 million (Sh85.7 billion) at the end of 2021, up from $704.4 million (Sh83.8 billion) in 2020.

ATI had made reductions in local exposure starting in 2019 and 2020 by a cumulative Sh14.7 billion, with the partial reversal of this portfolio redistribution last year an indicator of potentially rising demand for cover ahead of the 2022 election year.

Overall, the agency defied the difficulties posed by Covid-19 pandemic on underwriters to raise its gross written premiums by 6.5 percent to $6.6 billion (Sh785.4 billion).

Kenya, aside from hosting the ATI headquarters, is also the biggest single shareholder in the agency, having provided capital of $29.2 million (Sh3.47 billion) to the continental insurer.

State-owned reinsurer Kenya Re is also among the 12 institutional shareholders in the agency, with a capital outlay of $1 million (Sh119 million).

ATI supports trade and investment in African member States by providing comprehensive hedging solutions and offering covers against political and credit risks.

By the end of last year, the agency had increased its membership to 20, after Cameroon and Senegal joined as shareholders.

The insurer’s products include protection against various political risks including wars, seizure of an asset by the government, defaults, or changes in laws.

Kenya’s political risk was expected to remain elevated this year due to the General Elections, but insurers have been reporting muted demand for political cover, signalling confidence that the polls will not result in a disruption of business.

Political cover, much like that against terrorism, is mainly taken up by businesses that would be in harm’s way in case of political violence, whether through physical damage to premises and looting, or loss of business due to precautionary closures.

Elections in Kenya have often been characterised by unrest and violence, most notable in 2007 and 2017, costing businesses billions of shillings in lost earnings and damages.

Harold Mbati, executive director at Reinsurance Solutions Kenya Ltd, told the Business Daily in an earlier interview that the slow uptake is also indicative of the mainstreaming of political insurance, where businesses are now seeing it as normal to hold the cover continuously.

He added, however, that pricing of premiums for political risk had gone up in the first half of the year, in anticipation of a rise in demand closer to the date of the poll.

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