The increased uptake of insurance by banks seeking to cover their loan liabilities helped to boost African Trade Insurance Agency’s (ATI) net profit to Sh327 million for the year ended 2014.
ATI’s insured trade and investments were valued at Sh58 billion in Kenya, doubling the Sh29 billion recorded in 2013.
The pan-African insurer attributed the 130 per cent profit jump to rising demand by companies involved in infrastructure development, with banks that are financing the deals taking up almost 80 per cent of ATI’s insured risks.
“In 2014, we covered more banks and more trade flows in the region,” said ATI chief executive George Otieno on Tuesday at a media briefing.
“With this added support, banks have been able to increase their lending volumes, particularly within the SME sector,” he added.
The insurer said that for the first time its profits were substantially boosted by its underwriting business, with Sh115 million of the earnings.
Overall, the insurer broke the Sh97 billion ($1 billion) coverage mark, recording Sh125 billion ($1.3) billion in exposure, an increase of 45 per cent from 2013.
In 2014, ATI wrote 136 new policies, an increase of 22 per cent from 2013.
“Over time we have built a business that is more stable and predictable with a competent staff of expert underwriters,” said ATI’s Chief Underwriting Officer, Jeff Vincent.
According to Mr Vincent, at least 80 per cent of ATI’s business is renewable, meaning that every year they start with a solid income base.
Cost-cutting also boosted ATI’s results. The insurer had an expenses ratio of 56 per cent.
The Gross Written Premium stood at Sh1.6 billion ($17 million), up from Sh1.2 billion ($ 12 million) in 2013.
The company revealed that bonds- its newest product- in 2014 grew by 221 per cent from 2013.
Commercial risk products more than doubled to Sh432 million compared to Sh210 million in 2013.
The company said that around 60 per cent of its assets were invested in instruments with maturities below one year and around 50 per cent invested in highly marketable bonds.
The CEO said that ATI can now conduct business in non-member countries with a focus on trade transactions only. Its model, however, excludes the coverage of political risks in non-member countries.
Last year, in a partnership with the European Investment Bank, ATI received Sh213 million (2 million Euros), enabling the insurer to take up risks in the energy sector.
In Kenya, ATI has insured the risk of non-payment to investors in the Lake Turkana Wind power project. Kenya Power promised to buy power generated from the project.