Kenya Reinsurance Corporation (Kenya Re) has posted a 36.4 per cent drop in after-tax profit in the year ended December 2018, which the re-insurer attributed to higher claims, forex losses, lower income and impairment of assets.
Kenya Re net profit stood at Sh2.27 billion in the period compared to Sh3.57 billion the year before.
The Nairobi Securities Exchange (NSE)-listed re-insurer’s net earned premiums during the period under review grew four per cent to Sh14.2 billion from Sh13.6 billion the previous year.
The re-insurer’s gross written premiums remained nearly flat at Sh14.83 billion from the Sh14.82 billion reported in 2017.
The firm’s earnings from investments grew by 7 per cent to hit Sh3.38 billion last year compared to Sh3.16 billion in the previous period.
Net claims incurred increased by 16 per cent from Sh7.59 billion to Sh8.83 billion.
The board of directors of the re-insurer recommended a final dividend payout of Sh0.45 per share nearly half the 0.85 per share paid to shareholders the previous year.
Chief executive officer Jadiah Mwarania said the re-insurer, which offers covers to more than 160 insurance companies spread out in over 45 countries in Africa, Middle East and Asia is eyeing new markets across the globe in the face of stiffening competition.
Mr Mwarania said that the firm is dealing with stiff completion from domesticated re-insurers in countries like Nepal, Ethiopia and Uganda as well as new entrants.
“Mergers and acquisitions have led to larger re-insurance capacities within the conglomerates which in turn reduces their reinsurance requirements. Competition has also significantly increased continuously in recent times,” said Mr Mwarania.
“There are nine reinsurance companies that have physical offices in Nairobi including ourselves.”
Mr Mwarania however said the firm plans to leverage on its five year strategy that will see it invest in foreign reinsurers in efforts to remain relevant in countries it has operations.
Kenya Re draws most of its gross premiums from the Kenyan market where it will continue to enjoy mandatory cession of 20 per cent until 2020.
The guaranteed cessions to the company are backed by the Kenyan government which owns 60 per cent of the reinsurer, with the remaining shares held by the investing public at the Nairobi bourse.
The re-insurer was in March last year in the eye of a storm after it sent home Mr Mwarania and replaced him with Michael Mbeshi, the reinsurer’s property management general manager, in an acting capacity.
Mr Mwarania went to court to protest the sacking and was re-instated by the Employment and Labour Relations Court with Kenya-Re appealing the decision.