News Africa06 Apr 2020

Kenya:Real estate revaluation helps boost reinsurer's pretax gains in 2019

06 Apr 2020

Kenya Reinsurance Corporation has posted a 35% rise in pre-tax profit to KES4.18bn ($39m) for 2019 from KES3.10bn in 2018 despite a turbulent and difficult business environment last year.

The profit increase was driven by an 18% growth in gross written premiums to KES17.52bn in 2019, in addition to significant growth in the share of profit from the reinsurer's investment in associate comp[any Zep Re and gains on revaluation of investment property, according to financial statements published by the company.

Investment income grew by around 10% to KES3.71bn, attributable to the company’s investment strategy, says Kenya Re.

A summary of Kenya Re's financial performance is as shown:

        

 

2019

KES m

2018

KES m

2019/2018

Increase

GWP

17,521

14,838

18.1%

NEP

15,531

14,206

9.3%

Investment income

3,715

3,386

9.7%

Fair value gains on revaluation of investment property

2,177

397

448.3%

Share of associate profits

587

181

224.8%

Total income

22,117

18,266

21.1%

Net claims and benefits

(11,062)

(8,830)

25.3%

Total claims, benefits and expenses

(17,941)

(15,164)

18.3%

Pre tax profit

4,176

3,102

34.6%

 

The financial statements also show that Kenya Re's asset base increased from KES44.36bn at the end of 2018 to KES50.36bn at the end of 2019, a growth of 14%. Shareholders' funds jumped by 13% to KES31.95bn at the end of 2019.

Challenges

Key challenges faced by Kenya Re in 2019 included; reinsurance business domestication in many of its markets, price undercutting, changes in the structure of reinsurance treaties, regulatory changes, competition, capping of interest rates, a bearish equity market, oversupply of rental space and limited range of investment instruments.

COVID-19

Kenya Re managing director, Mr Jadiah Mwarania, said, “In the wake of the COVID-19 pandemic, we continue to seek ways to work smart and heavily leverage on technology to mitigate its negative effects. We will analyse the impact of the pandemic on business and develop appropriate response strategies.”

He added that the pandemic will have an impact on written premiums, claims and investment income amongst other business variables.  He also said that Kenya Re has activated its business continuity plan to ensure smooth operations in these difficult times.


 

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