Kenya Reinsurance Corporation posts Sh4b earnings before tax
Barry Silah @obel_barry
Kenya Reinsurance Corporation (Kenya Re) posted profit before tax of Sh4.18 billion during the period ended December 31, compared to Sh3.10 billion in the same period in 2018.
The reinsurer described the 35 per cent jump in profit as a commendable financial performance given the turbulent and difficult business environment experienced last year.
It attributed the profit leap largely to an 18 per cent growth in gross written premiums and 10 per cent growth in investment income.
Kenya Re managing director Jadiah Mwarania said the corporation managed to produce outstanding financial results including significant growth in shareholders’ funds despite the challenges it faced as a business.
“In the face of a challenging operating and macro environment encountered in 2019, the Corporation achieved impressive growth in the gross written premiums, investment income, profit before tax and profit after tax,” he said after releasing the results.
Gross written premiums grew by 18 per cent to Sh17.52 billion in 2019 from Sh14.84 billion the previous year.
Net earned premiums rose by nine per cent from Sh14.21 billion in 2018 to Sh15.53 billion in the reporting period while investment income grew by 10 per cent from Sh3.39 billion to Sh3.71 billion due to the corporation’s investment strategy.
The corporation’s cedant acquisition costs increased by five per cent from Sh3.89 billion to Sh4.09 billion while the increase in gross premium written was 18 per cent.
Shareholders’ funds grew by Sh3.58 billion, an increase of 13 per cent, from Sh28.37 billion in 2018 to Sh31.95 billion in 2019.
Financial results show that net incurred claims grew by 25 per cent to Sh11.06 billion from Sh8.83 billion in 2018 while operating expenses increased by a mere one per cent from Sh2.02 billion as at December 31, 2018 to Sh2.04 billion as at December31, 2019.
The results come hot on the heels of the corporation’s Financial and Credit Rating by Global Credit Rating Agency (GCR) upgrading from AA to AA+ with a stable outlook.
It also attained ISO 27001:2013 certification marking it as the 6th organisation in the country to receive the accreditation. The certification will help it to manage information risks.
The reinsurer identified some of the key challenges faced during the financial year as reinsurance business domestication in many of its markets, premium rate undercutting, increased retention capacity by pedants and change in structure of reinsurance treaties.
Others were regulatory changes, competition, capping of interest rates, bearish market trends in quoted equities and oversupply of rental space and limited investment vehicles.