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Kenya Re net profit rises to Sh1.56 billion

BUSINESS
By Lee Mwiti | August 31st 2016
Kenya Reinsurance Corporation MD Jadiah Mwarania (left) and Chairman David Kemei review the 2016 half-year results yesterday. The corporation has recorded a 4 per cent growth in net profit for thee half-year period ended June 30, 2016. (PHOTO: LEE MWITI/ STANDARD)

Kenya Reinsurance Corporation has recorded a 4 per cent growth in net profit for thee half-year period ended June 30, 2016. The Nairobi Securities Exchange-listed re-insurer saw its profit jump to Sh1.56 billion compared to Sh1.5 billion in the same period last year.

Presenting the company’s half-year results yesterday, Kenya Re Managing Director Jadiah Mwarania said the firm’s profit was powered by growth in gross written premiums. “Our gross written premiums shot up by 14 per cent in June 2016 from Sh6.2 billion in 2015 to Sh7.1 billion in 2016. Another area that grew significantly was investment income,” Mr Mwarania said.

The insurer’s investment income grew from Sh1.4 billion in June 2015 to Sh1.7 billion in June 2016, recording an upsurge of 20 per cent in the period under review. Mwarania said this income mostly came from investment in rental properties around the country, which have recorded a 97 per cent rate in occupancy.

The company, however, saw its total expenses grow from Sh4.8 billion to Sh6 billion again in the period under review, recording a 26 per cent rise. But it was the net claims incurred that went upward significantly and thus slowing the company’s growth. The Re-insurer recorded Sh2.7 billion as the net claims incurred in June 2015, compared to Sh3.5 billion incurred for the half-year period ended June 30, 2016, reflecting a 31 per cent growth.

Mwarania blamed the rise in claims to the two earthquakes that were experienced in Nepal last year. “In Nepal, we have re-insured 10 insurance companies. And risks re-insured include natural catastrophes. When the two earthquakes occurred last year, we paid off claims amounting to Sh450 million. We are, however, in the process of recovering this sum,” the MD said.

Kenya Re has also re-insured other companies in Asian countries such as Bangladesh, India and the United Arab Emirates (UAE). Mwarania also said the company was keen to expand into the Southern African region, having already opened a branch in Zambia. “Last year we opened an office in Ivory Coast that was supposed to help us penetrate the West African market,” Mwarania said.

“This year, we have opened another one in Zambia, which will target southern African countries such as Mozambique, Botswana and Namibia.”

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