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AAR full-year profit drops to Sh218m on high healthcare claims

NEWS
By Lee Mwiti | Apr 28th 2017 | 1 min read
By Lee Mwiti | April 28th 2017
NEWS

Increased claims saw full-year profits for AAR Insurance dip from Sh285 million in 2015 to Sh218 million in 2016.

The underwriter’s net claims rose from Sh2.4 billion to Sh2.7 billion in the period under review, while net operating expenses also soared from Sh742 million to Sh859 million.

Its gross written premiums, however, increased from Sh4.4 billion in 2015 to Sh6.5 billion, with total assets also increasing from Sh3.1 billion in 2015 to Sh5.2 billion last year.

In a financial statement signed by the Chairman Kipruto Kittony and Managing Director Caroline Munene, the insurer said despite recording a full-year growth in premiums, the surge in claims, especially from health segment, dug deep into its profits.

Munene (pictured) blamed AAR’s lower performance on the spiraling cost of healthcare in the country, which many insurance companies have been unable to contain. She said escalating costs invariably lead to higher premiums, hurting those covered by private medical insurers and even the National Hospital Insurance Fund.

Sector report

“Several factors are driving up health costs in the country including inefficiencies, over-servicing those with insurance, inflated consultancy and diagnostic and procedure fees. These, among other factors, have led to increase in claim ratios and thus declining revenues for insurers,” said Ms Munene.

In its annual sector report for last year, the Insurance Regulatory Authority cited AAR Insurance as one of the insurers whose balance sheets were hit by rising health claims.

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