Kenya Re records 15pc jump in full-year profit

Wednesday, March 29th, 2023 09:00 | By
Kenya Re acting MD Michael Mbeshi says results demonstrates the firm’s success in executing its five-year strategic plan. PD/File

Kenya Reinsurance Corporation (Kenya Re) has reported a net profit of Sh3.62 billion for the financial year ended December 31, 2022, a 15 per cent growth from Sh3.16 billion recorded in a similar period in 2021.

Acting Managing Director Michael Mbeshi attributed the performance to growth in total revenues and investment income, which pulled up the gross premiums.  “The commendable performance is also driven by prudent re-insurance underwriting, customer centricity offering, optimised business mix and uptake of technology to improve business outcomes and performance,” he said during the release of the firm’s financial results yesterday.

Mbeshi said the results are a clear demonstration of the remarkable success in executing Kenya Re’s five-year strategic plan, with the re-insurer outperforming expectations in all the core measures.

Strategic investments

The reinsurer, he added, had also significantly scaled up performance through strategic investments in new business lines and innovation with the key focus being Kenya and key countries with East, Southern and Northern Africa setting the stage for the next phase of its strategy.

During the period in review, the re-insurer’s total revenues jumped 15 per cent to Sh26.68 billion, supported by growth in investment income and gross premiums written, which grew by two per cent to Sh3.74 billion and 23 per cent to Sh24.98 billion respectively.

Net earned premiums were also up by 16 per cent to Sh22.15 billion compared to the prior year’s Sh19.04 billion. This, Mbeshi said, had increased the dividend by 100 per cent to Sh560 million.

The group incurred net claims of Sh13.87 billion or 21 per cent increase compared to Sh10.64 billion reported in 2021. Mbeshi said the financial year under review was momentous for the reinsurer in scaling up its innovation and digital business, with close to 21 per cent of all claims settled through the firm’s digitized processes. “Looking ahead, I am confident that we are well placed to expand our business footprint, scale our reinsurance products in markets attractive for investment and make strategic steps to outperform the industry via unique product offerings,” he added.

The reinsurer’s statutory operating expenses decreased by 16 per cent, majorly driven by the decrease in foreign exchange losses, decrease in amortisation cost of intangible assets and a decrease in corporate and other expenses, leading to a cost-to-income ratio of 83 per cent freeing up capital for reinvestment and future growth. Mbeshi stated that Kenya Re’s capital and liquidity ratios remain robust with sufficient headroom above the regulatory requirements. Total capital adequacy ratio closed the year at 875 per cent and liquidity reserve position at 731 per cent against regulatory limits of 200 per cent.

Kenya Re’s core activity is providing reinsurance services for most classes of business. Since commencing business in January 1971, Kenya Re has continued to provide reinsurance services to more than 265 companies spread out in over 62 countries in Africa, Middle East and Asia.

The financial results were announced amid the changes in the industry’s financial reporting standards and disclosures through the adoption of IFRS 17 which came into force in January 2023 from the default reporting index of IFRS 4 in existence since 2004.

Insurance Regulatory Authority (IRA) data shows the Kenyan market’s turnover reached $1.95 billion (Sh237.9 billion) as at September 30, 2022 representing an 11.4 per cent increase compared to the same period in 2021. Non-life premiums have progressed by 10.7 per cent to $1.1 billion (Sh134.4 billion or 56.5 per cent of the market share.

In the same period, the IRA reported that the life class of business recorded$ 850.64 million (Sh103.5 billion) in premium income, a 12.3 per cent growth over a year. The life activity accounted for 43.5 per cent of the total written premiums in Kenya as at September 30, 2022.

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