Claims from twin earthquakes in Nepal on April 25 and May 12 last year ate into the Kenya Reinsurance Corporation's half-year profit through June, the firm reported yesterday.
The East and Central Africa's largest reinsurer – with presence in 62 countries in Africa, Asia and Middle East – said it was among the risk-takers hardest hit by the catastrophes.
Kenya Re, owned 60 per cent by the state, said it has paid about Sh450 million in claims so far.
The impact was felt on its half-year net profit, which rose by marginal 4.13 per cent to Sh1.56 billion compared to the same period last year.
Managing director Jadiah Mwarania told an investor briefing in Nairobi that insurance firms cede any claim over and above Sh50 million in such a catastrophe to a reinsurer.
“The Nepal loss went way, way beyond the Sh50 million. So far, we have paid about Sh450 million,” Mwarania said.
Net claims and benefits to policyholders consequently rose 30.99 per cent to Sh3.55 billion.
Kenya Re's net earnings from premiums in the January-June period rose 19.34 per cent to Sh6.48 billion, it reported in an unaudited financial statement.
Income from investments – mainly from government securities, rental and term deposits – climbed 20.28 per cent to Sh1.72 billion from Sh1.43 billion the year before.
The publicly traded reinsurer increased investment into government securities last year to 35 per cent of its portfolio from 30 per cent in 2014, and in quoted equities to 30 per cent from 28 per cent.
It, however, cut its holding in fixed bank deposits to 23 per cent from 26 per cent of its portfolio, hinting at growing the share in light of the amended law. The new Act requires banks to pay a minimum 70 per cent of base rate set by the Central Bank on term deposits.
“Last year we reduced because banks were offering less interest rates (on deposit) than we were getting from Treasury bills and bonds,” Mwarania said. “With capping of interest rates at 14.5 per cent ...(and) because investment is a continuous process, we have to relook at where the highest return is and then shift the resources accordingly.”
The company has set a target of Sh100 million in new business this year from its Lusaka (Zambia) subsidiary, which it opened last December.
“We will continue to assess how much we achieve this year, but the objective is the office to maintain the business that we have and grow new business at a given target,” the CEO said.