Kenya-Re mulling continental expansion
Kenya Reinsurance Corporation (Kenya-Re) is seeking to expand its underwriting business across the African market as part of its growth strategy this year.
The underwriter plans to meet its annual revenue target after posting Sh1.19 billion profit before tax in half yeart, an increase of 56 per cent from Sh760 million recorded, in a similar period last year.
“We are likely to surpass our annual target based on our growth projections and we expect to grow by between 5 and 10 per cent by the time we release our full year 2022 results,” said corporation’s Managing director Jadiah Mwarania in an interview.
The company has been growing its market share in the local and regional reinsurance market where it has increased competition as other countries establish their own reinsurers.
It also enjoys protection in the local market where it is guaranteed 20 per cent of all reinsurance premiums from primary insurers such as Sanlam Kenya and Britam Group.
The corporation has traditionally depended on the Kenyan market from which it gets a mandatory 20 per cent premium from primary underwriters, making up nearly half of its business.
Part of that growth, according to him, will see the State majority-owned underwriter spread its operations across the continent while riding on its successes in markets like the Zambia subsidiary which serves a host of markets including South Africa, Angola and Malawi among others.
The firm’s expansion plans however, comes amid concerns that returns on equity in the insurance sector has been on a downward trend despite consistent year-on-year increase in GWP, according to an Insurance Outlook Report 2020/21 by Deloitte.
Squeezed margins in the sector, continued cases of fraud, and premiums that have grown at a slower rate than the economic growth, have had a negative impact on shareholders’ returns.
“As premiums have increased by less than the GDP growth rate, the general insurance industry should prepare for a slow-down in premiums as corporations and consumers cut down on insurance costs,” notes the report.