ICEA Life Assurance has posted a 35.8 per cent decline in net profit majorly on a drop in investment income as share prices on Nairobi Securities Exchange fell in Covid-19 environment.
Net profit for the year ended last December declined from Sh3.23 billion to Sh2.08 billion despite the 11 per cent rise in gross written premiums to Sh6.14 billion.
The firm said the performance was solid given the extraordinary disruption and economic uncertainty induced by the infectious virus.
Investment income —linked to returns from investments such as equities—dropped by nearly a quarter to Sh9.3 billion to reflect the fall in NSE share prices as investors dumped shares in pandemic environment.
“The decline (in profit) was largely on account of unrealised revaluation losses as a result of the fall in prices of stocks listed on the Nairobi Securities Exchange,” said the firm.
ICEA explained that the higher earnings for the previous year had been supported by a liability release following a regulatory lowering of the interest rate risk margin used in valuation of life insurance contract liabilities.
General insurance
During the review period, ICEA General Insurance posted a 23 per cent fall in net earnings to Sh682.5 million also weighed down by depressed investment income.
Net earned premium grew by 13 per cent to Sh3.4 billion but a 26 per cent fall in investment income led to a fall in the bottomline.
“The group and company reported a decline in profit… on the back of a decrease in investment income owing to depressed equity prices at the Nairobi Securities Exchange,” the firm said.
Investment assets grew by 3.3 per cent compared to a growth of 7.4 per cent in the previous year following unrealised revaluation losses in Kenya’s equity investment portfolio.
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