Shareholders of the Kenya Reinsurance Corporation (Kenya Re) have approved a dividend payout of Kes280 million with the firm optimistic of robust growth into the medium term despite significant headwinds.
Kenya Re Board chairperson Mrs. Jennifer Karina said the firm will realign its business strategy in the coming years to adapt to the changing trends and tap into emerging opportunities.
“Today, the shareholders have demonstrated their confidence in the future growth of the Company through approving the dividend payout as recommended by the Board,” she said during 24th Annual General Meeting (AGM) conducted virtually.
“Despite the uncertainties in 2021, we remain optimistic that 2022 will turn out positively. The Board remains positive and confident that with strong leadership and committed employees, we are well placed to optimize on the growth opportunities to deliver strong profits in the coming years.”
The dividend announcement comes on the back of a difficult period for insurance firms with the sector registering a slowdown in growth compared to previous years.
According to data from the Insurance Regulatory Authority, IRA, the industry recorded Kes234.7 billion in gross premiums in 2020, an increase of 2.3 percent compared to Kes229.5 billion in 2019.
Net profit for the sector in the year under review decreased significantly by 57.7 percent from Kes15.1 billion in 2019 to Kes6.39 billion in 2020.
Earlier this year Resolution Insurance, one of the leading brands in the country collapsed with over Kes6 billion in clients’ cash, insurance claims and creditors’ funds following a fallout between shareholders.
Kenya Re Managing Director Jadiah Mwarania told shareholders the firm focused its strategy on differentiating the business and proper redistribution of capital to the various classes of business.
“The Corporation’s footprint in 2021 was 482 insurance companies spread out in 84 countries in Africa, the Middle East, and Asia,” he said. “The African markets continue to be the primary focus of the Corporation with Kenya the biggest single market in the year.”
“The Corporation weathered the COVID-19 disruption to register a 10 percent rise in gross written premiums from Kes18.5 billion in 2020 to Kes20.3 billion in 2021,” he said.
Mr Mwarania said the firm banked on a regional approach to service delivery through its subsidiaries in Uganda, Zambia, and Côte d’Ivoire.
“We grew both treaty and facultative reinsurance business portfolios across our chosen markets,” he said. “We pursued new reinsurances and sought to retain the existing business growing the business portfolios directly from the ceding companies as well as leveraging on partnerships with intermediaries and partners.”
This year’s AGM was held on the back of London Based rating Company – AM Best, revising Kenya Re’s outlook to stable from negative and further affirming the Financial Strength Rating (FSR) of B (Fair) and the Long-Term ICR of “bb+” (Fair).
AM Best attributed the revision of the Long-Term ICR outlook to stable following corrective actions initiated by Management in 2020, which the ratings agency expects to lead to more stable underwriting performance.
The corrective actions that Kenya Re has taken include the non-renewal of its highly unprofitable crop business originating from the Indian subcontinent, an increased focus on underwriting discipline and a strengthening of credit control procedures.