Liberty Kenya’s net earnings down to Sh608m

Liberty Kenya Holdings #ticker:CFCI recorded a 9.8 percent drop in earnings for the year ended December 2018 to a net profit of Sh608 million, an indicator of slowing premiums uptake.

The group’s net insurance premium revenue slumped by Sh21.5 million to Sh6.3 billion as commissions earnings decreased by 12.5 percent to Sh844 million.

The listed insurance company’s investment income slumped by 94 percent to Sh125 million from Sh2.4 billion, which was due subdued stock market performance as seen on the NSE 20-share index that went to down 23.7 percent during the year.

Money paid out in claims and policyholder benefits decreased by 12.9 percent to Sh5.3 billion on account of reduced cancellation of policies as change in insurance contract liabilities grew by 4 percent to Sh689 million. Commissions paid out went down by Sh5.8 million, a pointer to decelerating activity in the sector.

“The operating businesses however showed great resilience under a difficult operating environment characterised by stunted premiums in Kenya and Tanzania…During the year, the equity market was on a downward trend with NASI (NSE Share Index), NSE 25 and NSE 20 declining by 18 percent, 17.1 percent and 23.7 percent, respectively, impacting investment earnings,” said the insurer in a statement.

“The group managed operating and business acquisition costs to similar levels recorded in 2017 in line with flat growth in premium income. The claims costs, however, declined on account of lower policy termination.”

Despite the slight decline in earnings, analysts from Genghis and Dyer & Blair earlier were optimistic that the firm’s long-term business would boost revenue while general insurance would likely be on a rebound.

The insurer said it is in the process of updating Policy Administration Systems and other data automation management processes to improve efficiencies.