Which way for Kenyan insurance industry as UAP sinks in first loss in a decade

By Newsroom Last updated Apr 2, 2019

Kenya’s UAP Holdings Tuesday announced Sh518 million loss, a first loss for the insurer in almost a decade and the third player in the industry on the Nairobi Securities Exchange (NSE) to post a loss.

The loss for the financial year ended December 2018 is a 166 percent decline in performance from the Sh608 million profit that was reported in the previous financial year. The firm announced a reduced gross written premium which sunk by 1.8 per cent to Sh18.7 billion despite a rise in net claims payable which rose by 10 per cent to Sh10.38 billion.

The insurer’s total income also dropped by 6.8 per cent to Sh18.7 billion as a result of a reduction in the investment income caused by poor performance of equities market at the Nairobi Securities Exchange.
UAP’s operating expenses dropped by 11 per cent to Sh5.4 billion from Sh6.14 billion on increased operating efficiency.

This surprise loss by UAP comes amid losses reported by Britam which returned a loss of Sh2.2 billion while Sanlam posted Sh1.97 billion loss as well as profit dip by reinsurer Kenya Re whose profits fell by 36.4 per cent to Sh2.27 billion with the three companies all having issued profit warning. Profit of Liberty Insurance also dropped by 9.8 per cent to Sh608 million. CIC Insurance had 31 per cent rise in profits to Sh625 million while Jubilee results are not yet out.

According to figures by industry regulator Insurance Regulatory Authority (IRA), in quarter four (Q4) for last year the claims settlement ratio for general liability claims increased to 9.0 per cent compared to 8.2% observed in Q3 2018. Over the same period, the claims settlement ratio for general non-liability claims decreased to 58.7% compared to 64.7% observed in the previous quarter.

The claims settlement ratio for the long term insurance business increased to 69.2% compared to 64.9% observed in the previous quarter.

Judging by the current trend, tough micro-economic conditions the industry could take a thumping in the coming months.