Listed insurance companies recorded a 5.6 percent decline in their earnings per share during the first three months of this year as compared to the same period last year despite the introduction of tough rules by market players to reduce fraudulent claims.
At the same time, analysts at Cytonn Investments project an increase in mergers and acquisitions in the insurance sector resulting to an increase in diversified capital raising initiatives to shore up capital following the adoption of a risk based supervision mechanism by the regulator.
Despite Kenya’s insurance sector remaining attractive and with vast potential, the sector is among others still grappling with low penetration currently at 2.8 percent compared to South Africa for instance at 14.1 percent.
In the first quarter this year according to a report by Cytonn Investments, locally listed insurance companies equity performance recorded a marginal improvement with a Return on Average Equity increasing by 190 basis points to 10.9 percent.
However, the listed insurance companies had a 5.6 percent decline in their earnings per share. The adoption of a risk based supervision mechanism by the regulator may see an increase in mergers and acquisitions resulting to a rise in diversified capital raising initiatives by some players to shore up capital.
A growing middle class, adoption of alternative distribution channels, technology, innovation and regional expansion have been identified among the key contributors to the growth of the insurance sector.
The report ranks Kenya-Reinsurance as the most attractive insurance company measured in terms of both the franchise value and intrinsic value scores followed by Jubilee Holdings, Liberty Holdings came in third from fifth last year, Britam is fourth, CIC group in fifth and Sanlam Kenya retained its sixth position.