Kenya Re maintains Sh840m dividend as net profit retreats

Kenya Reinsurance Corporation (Kenya Re) has maintained a Sh839.94 million dividend despite net profit retreating by 10.8 percent to Sh4.44 billion in the financial year due to foreign exchange losses.

The Sh839.94 million translates to a dividend payout of Sh0.15 per share and comes in the first financial year since Kenya Re declared a bonus issue that saw the number of its issued shares double.

In the previous year, Kenya Re spent a similar amount on a Sh0.30 per share dividend payout before the bonus issue of one additional share for each held.

This means the latest dividend per share will see investors receive the same amount as they did in the preceding year when net profit was Sh4.97 billion.

During the review period, Kenya Re’s insurance service result— the net amount of insurance revenue less insurance service expenses—grew 4.4 times to Sh2.95 billion from Sh676.96 million, marking one of the best underwriting results for the reinsurer.

However, despite investment income rising by 23.2 percent to Sh5.6 billion, the net insurance and investment result declined by 15.7 percent to Sh6.89 billion, weighing down on the bottom line.

Read:  Kenya Re investor wealth falls 24pc after bonus shares issue

The reduced net insurance and investment income was on the back of the reinsurer posting a Sh1.68 billion net foreign exchange loss compared with a net foreign exchange profit of Sh1.43 billion booked in the previous year as the shilling gained against the dollar.

“Our underwriting profit and investment income both grew but this was offset by huge exposure to forex, which moved from a gain of Sh1.4 billion in the previous year to a loss of Sh1.7 billion, being an expense of about Sh3 billion,” Kenya Re Managing Director Dr Hillary Wachinga told the Business Daily.

“We have dollar-denominated assets running into billions of shillings, with the first one being receivables of almost Sh5 billion and investments like Eurobonds. When you value dollar-denominated assets with a drop of almost 30 basis points, that is where the drop has come from. Overall, we remain resilient.”

The reinsurer, which is 60 percent owned by the Kenyan government, serves more than 80 markets through its head office in Kenya as well as three subsidiaries in Cote D’Ivoire, Zambia, and Uganda, exposing it to exchange rate movements.

The shilling last year gained against the dollar in contrast to the previous year when it lost about a quarter of its value.

→ [email protected]