Kenya Re hints at buying into other re-insurers as competition hots up

Kenya Reinsurance Corporation is considering buying stakes in national re-insurance companies in order to bolster its market share.

Kenya Re Chairman David Kemei said the reinsurance market has become “intensely competitive” with more reinsurers entering and playing in the same space.

“We were affected by the setting up of national reinsurance companies in neighboring countries such as Uganda, Tanzania and Ethiopia. That has led to a decline in our market share,” said Mr Kemei.

Speaking on Thursday during an investor briefing in Nairobi, the chairman says the firm wants to leverage on new opportunities presented by expansion into the region such as opening new markets.

Acting Managing Director Michael Mbeshi said the company will also review its strategy with a possibility of setting up local businesses in the various countries.

“We are looking at which markets have proper potential for us where we can set up and be considered as local companies,” said Mr Mbeshi. “We are also looking into ways of buying into some of the companies in those markets so that we can also benefit from businesses in those countries.”

Further, the company says that it wants to focus more on growing retakaful business as well as business from new subsidiaries opened in West Africa and southern Africa countries such as Botswana, Mozambique, Namibia and Zimbabwe. Retakaful is the Islamic alternative to the reinsurance industry.

During the briefing, the company announced 8.8 per cent growth in net profit to Sh3.58 billion for the year ended December 31, 2017. In the previous financial year, the profit was Sh3.29 million.

Net written premium rose by 13 per cent to Sh14.3 billion to lift total income from Sh17 billion to Sh18.2 billion. However, claims and policy holder benefits jumped 15.6 per cent or Sh1.1 billion to hit Sh8.1 billion.

“Claims have gone up because of growth of business and some accruing claims particularly from earthquake that occurred in Nepal in 2016 and a number of floods that occurred in the Indian regions,” explained Mbeshi.

Not fit into strategy

Kenya Re general manager for reinsurance Betty Nyaga said so far the corporation has paid out Sh850 million claims for Nepal earthquake and Sh240 million for floods.

Commenting on the controversial sacking of former managing director Jadiah Mwarania, who has since moved to court, the chairman defended the move saying that Mwarania did not fit into the company’s strategy.

“We didn’t dismiss the former MD. We separated with him. The board reviewed strategy and felt we needed somebody who could fit and run with the strategy,” said Mr Kemei.

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