Nairobi-based African Trade Insurance (ATI) is set to post a $30 million (Sh3 billion) net profit for the year ending this month, based on estimates from management accounts.
This will represent a 150 percent jump compared to net earnings of $11.9 million (Sh1.2 billion) recorded a year earlier.
“These impressive results are, in part, owing to an innovation in utilising ATI’s credit insurance to secure more competitively priced and longer tenures of commercial financing for a number of African sovereigns, amounting to over $1 billion (Sh101 billion) of additional financing,” the insurer said in a statement.
ATI says it expects to have issued insurance contracts covering risks valued at $6 billion (Sh606 billion) by year-end, up from $4.8 billion (Sh484 billion) the year before.
Its gross written premiums are also projected to rise to $100 million (Sh10.1 billion) from $66 million (Sh6.6 billion).
The company, which is owned by African government and private firms, says it expects its equity to rise by 52 percent to $400 million (Sh40.4 billion) by March 2020 as it receives capital from new shareholders.
Swiss insurance firm Chubb, for instance, has signed an agreement to buy a 3.5 percent stake in ATI for $10 million (Sh1 billion) while Ghana has also taken an unspecified ownership in the company for an undisclosed sum.
The insurer says Cameroon, Nigeria, Niger and Togo are set to join its shareholder list in the first quarter of next year.
European Investment Bank is funding the share purchases by the four countries.
ATI supports trade and investment in African member states by providing comprehensive hedging solutions, offering covers against political and credit risks.
It was established by treaty in 2001 and its shareholders currently include 16 African nations and 10 institutional members. Kenya, for instance, has a 10.36 percent in ATI and is the company’s top shareholder.
It is followed by Uganda (8.38 percent), Democratic Republic of Congo (7.1 percent) and Malawi (6.37 percent). Current shareholders will undergo a minor dilution once Chubb is issued with new shares in the company.
ATI issued covers in Kenya valued at Sh83.6 billion in 2018, with the company assuming Sh20 billion of the risks and passing the rest to other parties.
The insurer’s products include protections against various political risks including wars, seizure of an asset by the government, defaults or change in laws.