Dr Hillary Maina Wachinga - Group Managing Director, Kenya Re gives a speech during the release of the Kenya Reinsurance Corporations Half Year Financial Results on August 25, 2023, at Fairmont the Norfolk Hotel, Nairobi. PHOTO | BILLY OGADA | NMG
Kenya Re plans to exit India, citing increased losses in a market which generates about 32 percent of its gross premiums, making it the second-largest after Kenya.
Managing director Hillary Maina Wachinga said underwriters in India have been hit by losses from the agricultural sector.
The Asian country has suffered from bad weather including tropical cyclones flooding farmlands.
“We are doing a strategic withdrawal from the Indian market where we suffered heavy losses in the agriculture business and if you look at our half-year performance, you will notice we have taken a cut in premiums because we have forgone Sh2 billion premiums from the Indian market,” said Mr Wachinga.
The company’s net premiums dropped to Sh6.4 billion in the half year to June compared to Sh9.7 billion a year earlier.
A major reduction in business from India will significantly alter the company’s geographic diversification by source of premiums.
An earlier report published last year by South African rating firm Global Credit Rating said India had grown to become Kenya Re’s second largest source of business contributing 32 percent of its gross premiums.
This placed it second after Kenya which contributes 38 percent of the firm’s premiums.
The move to scale down business in India will leave the company to deepen its reliance on the Kenyan market from which it gets a mandatory 20 percent of premiums from primary underwriters.
Kenya Re has, however, been seeking to source more business from multiple markets including African countries.
The company made a net profit of Sh904.1 million in the half year ended June, representing an 8.6 percent growth from Sh832.1 million a year earlier.
The performance was driven by a sharp reduction in costs, including operating expenses and claims paid to the insured.
Net claims and benefits, for instance, dropped by Sh2.3 billion to Sh4.1 billion. Operating and other expenses meanwhile shrunk from Sh997.3 million to Sh275.3 million.
