Home ECONOMY Zep-Re profit hits 7-year low on tame Kenya growth

Zep-Re profit hits 7-year low on tame Kenya growth

by biasharadigest
Companies

Zep-Re profit hits 7-year low on tame Kenya growth

Kenya Re, which has 19.3 percent stake — the
Kenya Re, which has 19.3 percent stake — the largest— in Zep Re booked 36.4 percent decline in profits to Sh2.27 billion. FILE PHOTO | NMG 

Regional reinsurance firm Zep-Re earnings dropped to Sh1 billion, the lowest in seven years, as the Kenyan market booked the lowest premiums compared with that of its six other markets of operation.

Kenya, its largest market, posted 10.7 percent growth in premiums to $70.6 million (Sh7.2 billion), being a slower pace than the 32.8 percent growth booked in the previous year.

This pulled down total profitability by 57.7 percent from Sh2.4 billon posted the previous year, prompting the board to halve dividend payout to 255 million.

The last time Zep Re profit was this low was in 2011 at Sh896.3 million.

William Erio, the chairman, said the effects of contested 2017 elections spread through 2018, slowing down Kenya’s contribution to the overall written premium from 41.96 percent to 39.56 per cent.

“The insurance industry growth continued to be sluggish mainly due to a downward trend in original rate development across all lines of business,” Mr Erio says about Kenya in the annual report.

“It is hoped that this trend will reverse in 2019 as concerted market efforts aim to revive the large risk rating committee.”

Kenya’s growth rate was lower compared with that of Zambia (37.5 percent), Zimbabwe (31.1 percent), Uganda (26.7 percent), India (13.7 percent) and Ethiopia (11.3 percent). Last year was particularly problematic for most insurance companies in Kenya with the market incurring underwriting losses.

Zep Re’s profit was also brought down by increased frequency and severity of claims across the markets especially in the major classes of business.

Net claims incurred last year rose 34.5 percent to Sh7.6 billion.

Net claims ratio was 61.9 percent compared to 49.9 percent the previous year, meaning higher costs were incurred in relation to the premiums earned.

Reinsurance firms in the region are facing increased competition especially with countries such as Uganda, Tanzania and Ethiopia setting up own outfits.

Kenya Re, which has 19.3 percent stake — the largest— in Zep Re booked 36.4 percent decline in profits to Sh2.27 billion on claims and slowed growth in regional markets.

Related Posts

Leave a Comment