Kenya Reinsurance Corporation will increase the marketing budget for the Zambian unit with sights on growing business deals in South Africa, managing director Hillary Wachinga has said.
The Zambian subsidiary, which started operations in November 2016, contributed Sh71 million to the group’s profitability last year from the nine southern Africa countries it serves.
Dr Wachinga, however, says the Lusaka unit is performing below potential, and was yet to make significant forays into South Africa which controls more than two-thirds of insurance business on the continent.
“We have not done much to get business from South Africa. The [Zambian] subsidiary has an extended mandate to get more business from South Africa,” the Kenya Re boss told the Business Daily.
“We would like to have more business and participation in that country.”
Besides Zambia, the Lusaka office also serves Angola, Botswana, Mozambique, Namibia, Zimbabwe, Malawi, Eswatini and Lesotho.
The unit’s profitability trailed that of Uganda’s which stood at Sh90 million.
The Kenya Re’s Cote d’Ivoire Office, which started operation in 2010 and serves about 15 countries in west Africa, remained the most profitable with Sh 274 million.
The region’s oldest reinsurance firm has presence in more than 60 countries in Africa, Middle East and Asia says resourcing of the Zambia’s unit “will make economic sense for them to get us more business from that [southern Africa] market”.
Special focus will, however, be on South Africa.
“When you want to venture into a mature market like South Africa, you need to intensify your marketing activities and focus a lot on the quality of business that comes from that market,” Dr Wachinga said.
“We will be focusing on quick wins that give us business and this includes meeting our financial obligations as and when they fall due like we are already doing everywhere.”
Increased deals will inform the decision to set up a physical office in Africa’s most advanced economy in the long run.
“In the long-term, we might want to have some strategic alliances with existing players [insurers or reinsurers]. We may want to buy into an existing player there whether insurer or reinsurer and, of course, taste waters by opening a liaison office and basically having a physical presence there,” Dr Wachinga said.
Kenya Re, whose shares trade on the Nairobi bourse, reported a 14.6 percent growth in net profit to Sh3.6 billion last year.
The reinsurer’s net premiums rose to Sh22.1 billion from Sh19 billion posted the year before, while total investment income rose 7.3 percent to Sh2.9 billion.
