Kenya Re nets Sh900m profit despite drop in gross premiums

Kenya Re Managing Director Hillary Wachinga, Chairperson Catherine Kimura and CIC Group MD Hillary Wachinga during an investor briefing in Nairobi on August 25, 2023. [Jonah Onyango, Standard]

Kenya Reinsurance Corporation (Kenya Re) has reported a nine per cent rise in profit after tax of Sh900 million for the half-year period ended June 30, 2023.

During the period, the gross written premium stood at Sh9.9 billion, while the net premium dropped to Sh6.4 billion.

The reinsurer’s statutory operating expenses were down by 72 per cent to Sh300 million from Sh1 billion in the same period last year.

Group Managing Director Hillary Wachinga said the drop in expenses was a result of prudent management and forex gains.

“Key to this was the issue of forex gains. We had Signiant forex gains of Sh600 million, but we have also internally tried to contain our expenses,” said Dr Wachinga during an investor briefing in Nairobi yesterday.

Profit before tax for the half-year period was Sh1.2 billion as the firm recorded an investment income of Sh2.1 billion.

“We can assume this [investment income] will be at double that by the end of the year,” he said. Investment income during the period under review increased by 16 per cent compared to Sh1.86 billion in the first six months of 2022.

This is in addition to the 29 per cent decline in total outflows from Sh10.48 billion as of June 2022 to Sh7.40 billion at the end of June this year.

Net earned premiums dropped to Sh6.4 billion from Sh9.7 billion last year.

“The key reason is that we are adjusting our top line to recognise that we had significant pipelining of premiums at the end of the year, which was almost Sh30.4 billion. As the year proceeds, this comes down. At the same time, we adjust for unearned premium reserve (UPR) because what was pipelines was still not earned,” said the MD.

Dr Wachinga said the performance reflects the reinsurer’s resilience and adaptability in an ever-evolving insurance landscape.

“It also validates the relevance of our solutions to our insurers’ needs. This strength positions the Kenya Reinsurance Corporation as a reliable partner for insurers locally and across Africa, ensuring the security and continuity of their operations,” he said.

Kenya Re is implementing its 2022-2026 strategic plan, which seeks to consolidate its business in the continent. 

It has operations in over 83 countries in the continent, the Middle East and Asia, providing services through 482 companies.

The reinsurer is in the final phase of executing a five-year strategy built on key pillars that guide its operations, including sustainable growth goals and annual profitability as well as reinvention approaches to provide unique product offerings in line with market needs.

The firm reported a profit after tax of Sh3.62 billion for the year ended December 31, 2022, representing a 15 per cent growth compared to 2021 full-year results of Sh3.16 billion.

The company said the performance was a result of improvement in its reinsurance portfolio, speedy processing of claims enhanced partnership with intermediaries, and market development.

Dr Wachinga said at the time Kenya Re’s five-year business strategy has continued to reap dividends with non-funded income expanding and reinforced by strong growth from fire and engineering classes of business.

“The financial year under review has been momentous for Kenya Re in scaling its innovation and digital business, with close to 21 per cent of all claims settled through our digitised process,” he said.

Profit before tax in 2022 was up seven per cent to Sh4.59 billion from Sh4.27 billion in 2021 while the asset base went up 26 per cent to Sh70.13 billion from Sh55.63 billion in 2021.

Shareholders’ funds went up by 10 per cent to Sh40.77 billion from Sh37.10 billion in 2021.

“Intensified market engagements, diversification of portfolios and markets saw gross written premiums rise by 23 per cent to stand at Sh24.98 billion, while net earned premiums of Sh22.15 billion grew by 16 per cent compared to last year’s Sh19.04 billion,” the statement said.

Investment income rose from Sh3.66 billion in 2021 to Sh3.74 billion in 2022, while claims incurred were up 30 per cent in 2022 to Sh13.87 billion from Sh10.64 billion.