State-controlled Kenya Re anticipates a fall of KES1bn ($9.4m) decrease in its revenues this year due to the COVID-19 pandemic.
The decline would be equivalent to 5% of the company’s total earnings, the reinsurer's managing director Mr Jadia Mwarania told Capital Business in an interview. He added that the 5% hit would be “the worst-case scenario” for the company.
“At the moment, we have over 265 re-insurance contracts spread from across over 70 countries in diverse segments such as medical, trade credit, lawyers’ liability among others,” Mr Mwirania said.
“We expect the business to shrink in tandem with the lower GDP growth as projected by the government at the rate of 2.6% this year. On our end, we estimate the industry growth to shrink by at least 2-3%.”
Kenya Re had been predicting income of roughly KES19bn this year, based reinsurance premiums, property, investment income and business diversification.
To lessen the impact of the pandemic, the reinsurer is now focusing on aggressively collecting premiums from underwriters and brokers, while shoring up its business on the investment side including investing in treasury bills, bonds and fixed deposits to mitigate the effects of volatility.
The reinsurer's focus for the next half of the year will be to increase dollar reserves in anticipation of meeting foreign contract claims.