Terrorist attack at DusitD2 in Nairobi and Ethiopian Airline crash in March are some of catastrophes that dented Kenya Re profits for the half year ended June 30.
The Kenyan reinsurance firm saw its profits for the period drop to Sh1.07 billion from Sh1.23 billion same period last year.
The profit before taxation for the period stood at Sh1.38 billion compared to Sh1.756 billion for the period ended June 30, 2018, which is a decrease of 21 per cent.
Speaking while presenting the results, Kenya Re managing director Jadiah Mwarania attributed the drop to an upsurge in claims that rose by 49 per cent during the period under review.
The firm paid Sh4.9 billion in the first six months of the year compared to Sh3.3 billion similar period in 2018.
The firm has been reporting subdued results in the past three years, with half year results for 2018 being 24.17 per cent compared to the previous year.
''Our preference is a reflection of what is happening in the global economy. We have seen World Bank downgrading global growth for the year to 2.6 per cent from 2.9 per cent,' Mwarania said.
He added there has been a general slowdown in uptake of insurance products with penetration in Kenya only at 2.8 per cent.
The general or non-life insurance segment penetration is estimated to have hit 1.55 per cent in 2017, down from the 1.72 per cent recorded the previous year.
Life insurance penetration remained unchanged in 2017 at 1.05 per cent.
‘’The other risks that the insurance industry in Kenya and the region continues to grapple with are: fraud, access to skilled labor, lack of adequate reinsurance and cyclical macro-economic instability,’’ Mwarania said.
He added that the excessive competition in Sub-Saharan Africa countries has seen companies face weak underwriting conditions caused by price undercutting.
The firm's gross premiums however rose by 40 per cent due to rising opportunities found in agriculture which contributed Sh2.9 billion to revenues.
Kenya Re’s total assets also increased from Sh44.362 billion as at December 31, 2018 to Sh 45.828 billion as at June 30, 2019 is a three per cent increase.
Shareholders' funds on the other hand increased from Sh28.3 billion from Sh29.1 billion, translating to a three per cent increase.
“Our challenges ranged from increased competition, premium undercutting, domestication of reinsurance business in some of our key markets and changing reinsurance treaty structures towards excess of loss as opposed to proportional treaties and devaluation of currency in some of our markets,” Mwarania said.
Kenya Re is set to open a regional office in Uganda.
