Insurers in life segment triple profit to Sh5.9b

Insurance companies in the life cover business saw their net profits triple in 2016 to Sh5.9 billion. The growth was driven by a jump in premiums, which grew from Sh61 billion in 2015 to Sh73 billion in 2016.

This is according to the 2016 industry performance report by the Insurance Regulatory Authority (IRA) that was released yesterday. However, companies offering the general insurance cover recorded a steep dip in net profits which went down by a third, from Sh7.6 billion in the previous year to Sh5 billion in the period under review.

All in all, total premiums registered a growth of 12.3 per cent largely driven by the growth in the life sector. “This was an accelerated growth compared to 9.9 per cent growth witnessed in 2015. In terms of premiums, the life sector grew by 19.3 per cent compared to an 8.5 per cent growth in the non-life segment,” the report notes.

In a saliently notable turn of things, Britam Insurance made approximately 60 per cent of the profits in the life cover, recording Sh3 billion. Sanlam registered Sh1.4 billion in net profit, while Jubilee made Sh1 billion. Old Mutual was the biggest loser in the life segment registering a Sh1.3 billion loss after tax.

In the General Insurance business, Cannon Assurance took the lead with the biggest loss at Sh441 million. Phoenix East Africa recorded Sh201 million loss, while Resolution Assurance recorded Sh198 million loss. A rise in claims in the general insurance segment resulted to the losses witnessed by the industry in the period under review.

Declining reinsurance

“The loss ratio under general insurance for the period under review was 62.3 per cent. The general insurance business underwriters incurred claims amounting to Sh53.7 billion in 2016, an increase of 9.3 per cent compared to Sh49.1 billion incurred during the previous year,” the report reads in part.

Also, a growth in underwriting expenses contributed significantly to the losses incurred. Underwriting expenses comprise of expenses of management and commissions paid to agents. “The net spending on commissions for the acquisition of business in 2016 amounted to Sh12.3 billion, representing a growth of 11.3 per cent from Sh11 billion reported in the previous year,” the report avers.

At the same time, it adds that management expenses grew marginally by 6.8 per cent from Sh35.7 billion by the end 2015 to Sh38.1 billion a year later. Commissions and management expense ratios under general insurance were 7.8 per cent and 30.3 per cent respectively resulting to a combined ratio of 100.5 per cent in 2016. The report notes that Reinsurance premiums have been shrinking on the backdrop of declining reinsurance activity in the market.

The premiums reported by re-insurers by the end of 2016 amounted to Sh17.6 billion compared to Sh18.4 billion reported by the end of 2015. This represents a decline of 4.3 per cent during the same period under review.