Companies

Insurers dividend payout rises 79pc despite Covid hit

InsurTech

Guests follow proceedings during the launch of a new InsurTech ecosystem at Radisson Blu Hotel in Nairobi on July 16, 2019. FILE PHOTO | NMG

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Summary

  • Insurance sector dividend payout jumped 79 per cent to Sh4.4 billion last year rewarding shareholders despite ravages of the coronavirus pandemic on profitability.
  • This was an increase from Sh2.4 billion paid out in 2019 as some insurance businesses managed to navigate the tough economic times.

Insurance sector dividend payout jumped 79 per cent to Sh4.4 billion last year rewarding shareholders despite ravages of the coronavirus pandemic on profitability.

This was an increase from Sh2.4 billion paid out in 2019 as some insurance businesses managed to navigate the tough economic times.

Insurance Regulatory Authority data shows that 10 out of 43 general insurers’ paid Sh3 billion in dividends while five 27 long-term insurance companies paid Sh1.4 billion in dividends.

This was after surprise results for insurance companies which cut losses and even made profits in medical cover despite fears of adverse impact of the Covid-19 pandemic.

“In the full year period, January to December 2020, underwriting results in the general insurance business, improved significantly by 60.3 per cent from a loss of Sh2.97 billion in the same period last year, to loss of Sh1.18 billion. The medical class had the highest underwriting profits which stood at Sh1.30 billion,” Commissioner of Insurance Godfrey Kiptum said.

The 10 general insurance businesses that paid Sh3 billion dividends in 2020 included APA, GA, Geminia, Heritage, Icea Lion, Intra-Africa, Mayfair, Tausi, UAP and Kenya Re.

In 2019 the general business firms that paid Sh1.8 billion were APA, Britam, CIC, GA, ICEA, Heritage, Mayfair, PACIS, and Tausi.

In long- term business, Britam, GA, ICEA Lion, Kenindia, Sanlam paid Sh1.4 billion in 2020 up from the Sh666 million paid by Britam, CIC life, GA Life Insurance, ICEA, Kenindia and Liberty Life in 2019.

The Coronavirus pandemic was expected to hit companies forcing them to seek ways of preserving cash including withholding dividend payout.

Insurance companies were also expected to increase their capital in line with a new law that introduced risk based regime which requires them to preserve cash.

The law is expected to increase current standard capital of Sh300 million for general business to Sh600 million or 20 per cent of the net-earned premiums of the preceding financial year, whichever is higher.

Long-term business (life) insurers currently setting aside Sh150 million will raise their capital to Sh400 million, or five per cent of the liabilities of the business for the financial year, whichever is higher, while a composite underwater will have to shore up capital to Sh1 billion.

Delays in implementing the rule and surprise profitability of the sector has emboldened insurers to pay shareholders.