Kenya Reinsurance Corporation posted a 35% rise in profit before tax from Ksh 3.10B in 2018 to Ksh 4.18B in 2019, a commendable financial performance given the turbulent and difficult business environment in 2019.
The impressive profit increase was driven by 18% growth in gross written premiums in addition to 10% growth in investment income.
Gross written premiums grew by 18% to Kshs. 17.52 billion in 2019 from Kshs. 14.84 billion the previous year. Net earned premiums rose by 9% from Kshs. 14.21 billion in 2018 to Kshs. 15.53 billion in the reporting period. Investment income grew by 10% from Kshs. 3.39 billion to Kshs. 3.71 billion. This was driven by adhering to the Corporation’s investment strategy.
The Corporation’s cedant acquisition costs increased by 5% from Kshs. 3.89 billion to Kshs. 4.09 billion while the increase in gross premium written was 18%.
The shareholders’ funds grew by Kshs 3.58 billion, an increase of 13%, from Kshs 28.37 billion in 2018 to Kshs 31.95 billion in 2019.
Net incurred claims grew by 25% to Kshs 11.06 billion from Kshs 8.83 billion in 2018 while the Corporations’ operating expenses increased insignificantly by a mere 1% from Kshs. 2.02 billion as at 31 December 2018 to KShs.2.04 billion as at 31st December 2019 an indicator of disciplined management of operating expenses.
Releasing the results, Kenya Re Managing Director, Jadiah Mwarania said, “Despite the challenges we faced as a Corporation, we managed to produce outstanding financial results including significant growth in shareholders’ funds.” He further added that 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.
The results come hot in the heels of the upgrading of the Corporation’s Financial and Credit Rating by Global Credit Rating Agency (GCR) from AA to AA+ with a stable outlook.
The Corporation also attained ISO 27001:2013 certification marking it as the 6th organization in the country to receive the accreditation. The certification will help the Corporation manage information risks.
Key challenges faced by the Corporation during the financial year included; reinsurance business domestication in many of its markets, premium rate undercutting, increased retention capacity by pedants, change in structure of reinsurance treaties, regulatory changes, competition, capping of interest rates, bearish market trends in quoted equities, oversupply of rental space and limited investment vehicles. Consequently the Corporation’s shareholders will receive a dividend payment of Kshs. 0.10 per share once approved by an AGM.
“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 analyze the impact of the pandemic on business and develop appropriate response strategies.” said Mr. Mwarania. He added that the pandemic will impact the written premiums, claims and investment incomes amongst other business variables. He also stated that the Corporation had fully activated its Business Continuity Plan to minimize work disruptions and ensure that the business continues to function in these challenging times.
The oldest reinsurer in the country celebrates its 50th anniversary this year and remains committed to its core values of transparency, ethics and professionalism while ensuring overall success, business profitability and overall growth of the reinsurance and insurance industry as a whole.