Businesses & Financial News

Fine-tuning the Midas Touch

Succession planning, according to Mwarania is an important part of the talent management process, as it provides a way to identify key roles, as well as people with the right skills and positions that may need filling in a short space of time.

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By Steve UMIDHA

The naming of Jadiah Mwarania as Managing Director of Kenya Reinsurance Corporation (Kenya Re), over a decade ago, was another chapter in a story marked by the ability to seize an opportunity and to succeed beyond expectations – other’s expectations, at least.

His has been a remarkable journey – a cocktail of ups and downs, rising through the ranks to run the show, albeit with self-effacement.

I quickly learnt something about Mwarania when we sat down for an interview recently – his distinctive good-humored persona. His members of staff simply signify him as “a good boss, an easy person to work with.”

But even for the most gifted individuals like the low-keyed Kenya Re boss, the process of becoming a leader is an arduous, although rewarding expedition of continuous learning and self-development. The initial test along the path is so fundamental that we often overlook it.

“I think being a leader comes with a lot of responsibilities and personally I have had to embrace qualities like consistency, professionalism, competency being goal-oriented among others, when you have such qualities, I believe opportunities will always find you,” opens up the softly-spoken Mwarania.

Prior to his appointment at the helm, the self-assured family man had previously served as General Manager for Reinsurance Operations, something he admits primed him for the big role.

“We always start somewhere, and my previous engagements as well as the belief and trust from my Board prepared me for this position,” he narrates.

Right policies

Mwarania, is however quick to acknowledge that, he’s been a beneficiary of a well-functioning company which sticks to its policies and is always equipped to extend administrative opportunities to any of its staff who meet the desired qualifications.

“This is something we discuss every six months as a company and it is across all departments,” discloses Mr. Mwarania who believes having an internal succession planning in any company, offers steadiness and continuity without having to hire from outside.

“It also gives employees a sense of belonging, which is very important,” he says.

According to him, succession planning is an important part of the talent management process, as it provides a way to identify key roles, as well as people with the right skills and positions that may need filling in a short space of time.

Mwarania further points out that proper succession planning in a massive company like Kenya Re, also provides a way to cut the costs of recruitment, enabling organizations to manage recruitment in-house.

“Hiring from within fosters what I can call greater employee loyalty, which can have concrete benefits throughout the company, and it is a culture we strive to maintain as a group,” he discusses, adding that his previous positions in the company gave him the leg-up in his appointment at the corner office.

Succession planning, akin to what is now a familiar ethos at Kenya Re, allows thriving businesses to identify the most qualified future leaders of the company.

Equally, creating a succession plan allows companies to more quickly identify positions and employees that are most critical to the company’s future success – those Mwarania says, “understand the company’s fabric.”

How an organization and individuals manage these phases is crucial to an effective transition and continued momentum for the organization. Get it wrong, and the dislocation from one leader to the next increases the risk of organizational disruption.

To him, reputation and business relationships are valuable assets to take on to the next stage if a company is to have consistency in terms of revenue growth and identity.

All organizations according to Girish Thakur – a seasoned management consultant, can benefit from the principles of identifying crucial job skills, knowledge, social relationships, and organizational practices and passing them on to prepare the next generation of workers, thereby ensuring the seamless movement of talent within the organization.

The convergence of a company’s needs and the employees’ interests can occur in succession planning because of its wide scope and open process, he asserts.

But for many, the motivation is primarily emotional — a desire to make a success of the last chapter of their service to an institution, its people, and its customers.

“When my term comes to a close, I think I would want to be remembered as having put in place structural policies and conducive business models capable of growing the group beyond its present financial state,” Mwarania reveals, a proud leader of a one of the oldest Reinsurer in Eastern and Central Africa.

Financial performance

Indeed, Kenya Re’s Managing Director has been instrumental in the firm’s revenue growth since he took over at the helm, albeit with mixed growth performance, owing to market volatility and other macroeconomic conditions.

Kenya Re’s profit before tax as at June 2022 stood at KES 1.19 billion, which is an increase of 56 percent compared to KES 760 million (in PBT) the firm registered in a similar period last year.

Gross written premiums grew by 15 percent from KES 9.59 billion in June 2021 to KES 11.0 billion in June 2022, while Net earned premiums grew by 12 percent from KES 8.69 billion in 2021 to KES 9.77 billion in 2022.

While the firm’s investment income dropped by 2 percent from KES1.90 billion in June 2021 to KES 1.86 billion in June 2022, Kenya Re’s operating expenses decreased by 6 percent from KES 1.06 billion in June 2021 to KES1.00 billion in June 2022.

The Corporation’s asset base in the period under review also rose from KES55.82 billion in December 2021 to KES 57.45 billion in June 2022, a growth of 3 percent, while shareholders’ funds increased from KES 37.04 billion in December 2021 to KES 37.63 billion in June 2022, representing a growth of 2 percent.

The firm’s Profit before tax for the year 2020 the period when the pandemic broke, stood at KES 3.98 billion, a decrease of 5 percent from profit before tax of KES 4 .18 billion in 2019, while the asset base increased from KES 50.36 billion in 2019 to KES 53.24 billion in 2020, which was a growth of 6 percent.

On the other hand, shareholder funds increased from KES31.95 billion in 2019 to KES 34.40 billion in 2020, a growth of 8 percent.

The disparity in revenue profit was a result of recent acquisition dealings by the firm which increased by 28 percent from KES 2.22 billion to KES 2.85 billion.

Expansion plans

The Corporation’s resilience at a time the economy is grappling with the adverse ripple effects of the Covid pandemic and the Ukraine-Russia war, according to its MD, will see the firm increase its reinsurance capacity to cushion insurance companies across the region.

“Going forward we have plans to increase our footprint across the continent through our diversified undertakings and potentially position the corporation as a global brand as part of our strategic plan,” he noted.

The firm is on course with the implementation of the 2022-2026 strategic plan which it says guides all its business operations and activities both locally and externally.

The company has been investing to grow its market share in the local and regional reinsurance market where it says there is increased competition as various countries establish their own reinsurers.

Other factors raising the competitive pressure in the space where the brand operates, include mergers and acquisitions, increasing retention capacity of direct underwriters reducing reinsurance premiums, and creation of captive reinsurance companies which are new entrants in its target markets.

Growth (2022) projections

Mwarania is optimistic that the Corporation will meet its target for the year despite inflation concerns that have been dominating the airwaves recently, rising to a fever pitch in August when the overall inflation rate reached 8.5 percent.

The country’s annual inflation rate has been rising on account of many macroeconomic factors including the Covid-19 pandemic but has intensified due to the ongoing global war between Russia and Ukraine.

The ensuing effect of rising inflation – which is a general increase in the prices of goods and services in an economy, has led to a slow growth in consumer spending among Kenyans, with most households today opting for cheaper alternatives to the products they were accustomed to.

In fact, figures by the Kenya National Bureau of Statistics (KNBS) show that the Consumer Price Index CPI in the country rose to 125.05 points in July from 124.22 points in June of 2022.

Ordinarily, when there is an upward change in the CPI, this means there has been an increase in the average change in prices over time – which eventually leads to adjustments in the cost of living and income.

Notwithstanding those challenges, Kenya Re is confident of growing its business between 5 and 10 percent by year end, in what its MD projects will yield to around KES20Billion in net earnings.

“Based on our projections we could meet that feat despite the pre-existing market concerns. But that hinges on the outcome of the Presidential elections,” pointed out Mwarania.

His predictions could come to pass if the recently upheld presidential elections are anything to go by.

On September 5th 2022, the Nairobi Securities Exchange (NSE) investors gained Sh42.1 billion in paper wealth in the highest daily gain as markets embraced the Supreme Court ruling which upheld the win by Deputy President William Ruto following the August 9th elections.

The 7-bench judge led by Chief Justice Martha Koome unanimously dismissed seven petitions challenging Ruto’s victory after his closest competitor Raila Odinga challenged his victory after alleged electoral malpractice.  The country’s apex court however, ruled that Odinga’s legal team lacked evidence to back those claims.

Businesses welcomed the ruling, which is expected to lift the economic stasis that has slowed activity in the country since the August 8 General election over the uncertainty of the court outcome.

Kenya Reinsurance Corporation Limited underwrites various classes of reinsurance for companies in Africa, the Middle East and Asia and covers reinsurance for the short-term and long-term business sectors.

Its short-term business division offers motor, marine, aviation, fire and accident reinsurance products. Its long-term business division offers individual and group life reinsurance products.

Kenya Reinsurance Corporation Limited also has interests in property acquisition and management; including office buildings for rent and the development of office properties and housing projects.

 

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