Kenya Reinsurance issues profit warning, net earnings to decline by over 25 per cent
SEE ALSO :Kenya Re sounds warning on profitThe company has attributed the decline to high claims, forex losses due to currency devaluations in some markets where it operates, an unexpected reduction in income from associate and impairment on the asset held for sale. Early last year the company said it was considering buying stakes in national re-insurance companies in order to bolster its market share. The company noted the reinsurance market has become “intensely competitive” with more reinsurers entering and playing in the same space. Notably, setting up of national reinsurance companies in neighboring countries such as Uganda, Tanzania and Ethiopia have led to a decline in Kenya Reinsurance market share. Last year seemed a challenging period for the insurance companies going by the amount of money lost in business by some companies that have announced their full-year results. Sanlam has announced a Sh 1.97 billion loss for the year ended December 2018.
SEE ALSO :Higher claims trim Kenya Re’s profitsSanlam lost Sh1.1 billion in long-term investments in bonds that went sour, including debt notes and equity in Kaluworks, Real People and Athi River Mining. Sanlam Chairman John Simba said Sh650 million in earnings was also shaved off the actuarial adjustment on reserving basis even as the industry performed below par. The firm said the recovery of money lost to distressed companies would be key in turning around the business from the huge losses.