FINANCIALS

Massive motor claims dent Jubilee's profits

Early this year, Jubilee Holdings announced plans to lay off 52 employees as it completes the splitting of its insurance business in Kenya

In Summary
  • The firm which has been posting solid results for more than a decade failed to grow its profit for the first time in 12 years in 2018
  • Loss in general business reflects the continued challenges faced by insurers in the highly competitive Kenyan market.
Nizar Juma Chairman Jubilee Holdings during the launch of Explorer health insurance at Serena yesterday photo\KARUGA WA NJUGUNA
Nizar Juma Chairman Jubilee Holdings during the launch of Explorer health insurance at Serena yesterday photo\KARUGA WA NJUGUNA

Jubilee Holdings Limited (JHL) profits have fallen for the second successive year mainly on poor earnings from the loss-making non-life insurance segment.

According to the firm’s full-year results released on Friday, profits for the year ended December 2019 shrunk 2.6 per cent to Sh4.01 billion compared to Sh4.12 billion the previous year.

The firm which has been posting solid results for more than a decade failed to grow its profit for the first time in 12 years in 2018, slowed by a decline in earned premiums as expenses shot.

Chairman Nizar Juma said the non-life segment, which represents 57 per cent of the total insurance industry gross premiums, generated an underwriting loss of Sh2.97 billion during the year under review, an increase of 80 per cent, compared to the loss reported in 2018; mainly due to rising claims in the motor segment.

“Clearly this level of loss-making is not sustainable in the long run, eroding the capital of many companies within the industry and the capacity of these companies to adequately serve the insured,’’ Juma said.

He added that the underwriting loss in general business reflects the continued challenges faced by insurers in the highly competitive Kenyan market.

Early this year, Jubilee Holdings announced plans to lay off 52 employees as it completes the splitting of its insurance business in Kenya to increase efficiency and management focus and to comply with the revised 2010 Insurance Act.

The law requires all composite companies to have separate entities, by separating short-term underwriting business from the long-term underwriting business.

The separation has led to the creation of two new companies, Jubilee Health Insurance offering medical covers and Jubilee General Insurance offering general insurance covers.

“Whilst the cost of this rebuilding process has been significant, it was clearly necessary, and the Kenya general business is now well-positioned for profitable growth,’’ Juma said.

 

The firm reported a growth of nine per cent in total gross written premiums to Sh38.19 billion compared to Sh34.75 billion in 2018.

It also delivered strong profit before tax of Sh5.01 billion, which was however lower compared, to Sh5.3 billion registered in the previous financial year.

The Group’s total assets grew by 14 per cent to Sh130.08 billion from Sh114.19 billion while total shareholders’ equity and reserves increased 10.9 per cent from Sh25.47 billion to Sh28.25 billion.

''This growth in assets and shareholder equity continues to demonstrate the financial strength of the Group based on decades of focus on improving the quality of life in the region, and operating insurance business based on sound and prudent best practices and principles,’’ Juma said.

Jubilee's long-term business posted a growth of 13.6per cent to Sh15.89 billion, which included Individual Life growth of 16.3 per cent and Group Life growth of 19.4 per cent

The medical business posted a growth of 8.9 per cent from Sh9.94 billion to Sh10.82 billion, with an impressive underwriting profit of Sh721 million from all countries.

The general business grew by six per cent to Sh11.48 billion, however with an underwriting loss of Sh480 million.