Falling NSE stocks hit insurers earnings as market volatility continues

An investor at the NSE office in Nairobi. FILE PHOTO | NMG

The drop in share prices is set to hit the earnings of insurers with heavy exposure to the stock market.

The value of stocks listed on the Nairobi Securities Exchange (NSE) has dropped by Sh586 billion since the start of the year, with large companies leading the decline.

Insurers report higher investment income when their portfolios of listed equities rise. A market downturn has the opposite effect, generating paper losses.

An insurer’s bottom line is, however, influenced by several factors including the performance of the underwriting business.

The stock market volatility has seen insurers such as Jubilee Holdings and Britam Holdings reduce their investment in listed equities in favour of government bonds, real estate, and other private assets.

Safaricom, the most widely held stock, has one of the largest declines of 36.4 percent over the past 12 months to trade at Sh26 on Tuesday.

East African Breweries Plc has shed 23.8 percent over the same period to close at Sh141. Co-op Bank’s share price declined 11.6 percent to Sh11.3 while that of KCB fell 8.6 percent to Sh38.1.

Cigarette manufacturer BAT Kenya saw its share price drop 8.8 percent to Sh420.

A few blue-chip stocks have gained over the review period including Equity which is up 6.4 percent to Sh45.5.

The latest sell-off comes despite higher earnings corporate earnings and record dividend payouts.

The trend has been attributed to foreign investors fleeing frontier and emerging markets in the wake of the Russia-Ukraine war and rising interest rates in developed economies.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.