The Ethiopian air crash which occurred in March led to a 12.4 percent profit loss for Kenya Reinsurance Corporation (Kenya Re) after it issued claims related to Sh41.4 mn to an undisclosed insurer.
Kenya-Re, which offers covers to insurance firms, noted that the claims related to the fatal air crash contributed to a 48.57 percent jump in net claims thus affecting the net profit for the period ended June 2019.
The firm’s net profit stood at Sh1.08 bn in the period compared with Sh1.23 bn the year before, the company paid Sh4.9 bn in the first six months of the year compared to Sh3.3 bn similar period in 2018.
The firm has been reporting declining results in the last three years, in 2018,the half-year results were 24.17 percent compared to the previous year.
According to Chief executive Jadiah Mwarania, the recent Dusit D2 attack also contributed to the reinsurer’s decline in profits, it incurred property damage linked claims amounting to Sh44 mn.
Mr Mwarania also added that uptake of insurance products in Kenya is low with a penetration estimated to be only at 2.8 percent.
‘’The other risks that the insurance industry in Kenya and the region continues to grapple with are: fraud, access to skilled labor, lack of adequate reinsurance and cyclical macro-economic instability,’ he said.
The Nairobi Securities Exchange (NSE)-listed reinsurer is also planning to open a subsidiary in Uganda as part of its strategy to tackle competition from similar reinsurers firms.
Kenya Re also announced that it would distribute two billion new shares to qualifying investors from this month.
“Our challenges ranged from increased competition, premium undercutting, domestication of reinsurance business in some of our key markets and changing reinsurance treaty structures towards an excess of loss as opposed to proportional treaties and devaluation of the currency in some of our markets,” he said.
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