The Kenya Reinsurance Corporation (Kenya Re) has posted a 12.2% fall in net profit in the half year ended 30 June due to an increase in claims. Net profit stood at KES1.08bn ($10.5m) in the period compared with KES1.23bn the year before.
While net earned premiums jumped by 16.6% to KES7.42bn in 1H2019, net claims incurred surged by 48.57% to KES4.99bn in the period. Some big claims came from the Ethiopian Airlines plane crash in March and the Dusit terror attack in January, where the firm paid KES42m and KES44m respectively. It also paid KES44m in claims for floods in Asian countries.
Kenya Re posted a 40% rise in gross written premiums from KES6.332bn to KES8.860bn in 1H2019 compared to the corresponding period last year, because of agriculture business. The reinsurer obtains most of its gross premiums from the local market where it will continue to enjoy mandatory cession of 20% until 2020.
The government owns 60% of listed Kenya Re, with the remaining shares held by the investing public.
Kenya Re's CEO Jadiah Mwarania said that the reinsurer is dealing with tougher competition from domestic reinsurers in countries like Nepal, Ethiopia and Uganda as well as new entrants.
He said, “Some of the challenges the corporation faced during the first half of the year 2019 ranged from increased competition, premium undercutting, domestic reinsurance business in some of our key markets and changing reinsurance treaty structures towards excess loss as opposed to proportional treaties and the devaluation of currency in some of our markets.”
He added that the reinsurer aims to develop new markets as well as expand existing markets in order to increase market share, spread business risks and increase return on shareholders’ funds. Kenya Re has enhanced its capital to enable it access business in the Middle East, North Africa and some jurisdictions in West Africa. The corporation will soon open a regional office in Uganda.
Kenya Re board chairman, Chiboli Shakaba, said that the company will also continue to focus on the local market by enhancing existing products and introducing new ones as dictated by the needs of the market.