This post aims to show a comparative analysis of companies involved in the insurance business in Kenya. I went through the Full Year 2010 Results for 4 companies listed at the Nairobi Stock Exchange as well 4 others, 2 of which are preparing for listing. The 8 companies, listed in descending order of Profit Before Tax, are:
· Jubilee Holdings
· Kenya Re-Insurance
· British American Insurance
· UAP Holdings
· Pan Africa Insurance Holdings
· Lion of Kenya Insurance Company
· CIC Insurance
· CFC Insurance Holdings
*Total expenses and commissions have been calculated by adding commissions payable, operating and other expenses plus acquisition and finance costs (if present)
*Equity Investments have been calculated by adding quoted shares and unquoted share
*Unearned Premium refers to insurance premium that is paid beyond the current period, so it is not yet earned by the insurer. If the policy is cancelled, the insured should receive a refund of the unearned amount
*Some fields have been left blank as I was unable to get the exact amounts from the financial reports
*I used two tables to show the 8 companies as they would not fit properly on one
*The use of 2 decimal places may cause a variance from official company data regarding calculation of percentage changes
*A lot of input and calculations were done, thus any error on my part can be mentioned on the comments section
JUBILEE HOLDINGS | KENYA RE-INSURANCE | BRITISH AMERICAN | UAP HOLDINGS | PAN AFRICA HOLDINGS | |
 AMOUNT IN KENYA SHILLINGS | |||||
NET PREMIMS EARNED | 5.36 BILLION | 4.27 BILLION | 3.66 BILLION | 4.15 BILLION | 3.54 BILLION |
NET CLAIMS AND BENEFITS | 5.62 BILLION | 2.05 BILLION | 3.82 BILLION | 2.42 BILLION | 3 BILLION |
UNDERWRITING LOSS/PROFIT | -0.26 BILLION | 2.22 BILLION | -0.16 BILLION | 1.73 BILLION | 0.54 BILLION |
INVESTMENT INCOME | 2.15 BILLION | 1.68 BILLION | 2.68 BILLION | 1.12 BILLION | 1.1 BILLION |
TOTAL INCOME | 9.77 BILLION | 6.43 BILLION | 6.76 BILLION | 5.62 BILLION | 4.85 BILLION |
EXPENSES AND COMMISSIONS | 2.46 BILLION | 2.8 BILLION | 1.91 BILLION | 2.4 BILLION | 1.49 BILLION |
PROFIIT BEFORE TAX | 2.05 BILLION | 1.66 BILLION | 1.04 BILLION | 0.79 BILLION | 0.67 BILLION |
PROFIT AFTER TAX | 1.84 BILLION | 1.54 BILLION | 0.89 BILLION | 0.63 BILLION | 0.59 BILLION |
RETAINED EARNINGS | 4.48 BILLION | 6.35 BILLION | 0.59 BILLION | 1.93 BILLION | 0.73 BILLION |
TOTAL ASSETS | 31.65 BILLION | 17.24 BILLION | 21.42 BILLION | 12.39 BILLION | 10.67 BILLION |
EQUITY INVESTMENTS | 6.73 BILLION | 2.64 BILLION | 3.2 BILLION | 3.41 BILLION | |
UNEARNED PREMIUM | 3.51 BILLION | 1.64 BILLION | 0.72 BILLION | 2.21 BILLION | |
LION INSURANCE | CIC INSURANCE | CFC INSURANCE HOLDINGS | |
AMOUNT IN KENYA SHILLINGS | |||
NET PREMIMS EARNED | 1.08 BILLION | 3.46 BILLION | 3.53 BILLION |
NET CLAIMS AND BENEFITS | 0.62 BILLION | 2.01 BILLION | 2.71 BILLION |
UNDERWRITING LOSS/PROFIT | 0.46 BILLION | 1.45 BILLION | 0.82 |
INVESTMENT INCOME | 0.46 BILLION | 0.24 BILLION | 1.58 BILLION |
TOTAL INCOME | 1.78 BILLION | 3.94 BILLION | 5.37 BILLION |
EXPENSES AND COMMISSIONS | 0.55 BILLION | 1.33 BILLION | 2.21 BILLION |
PROFIIT BEFORE TAX | 0.61 BILLION | 0.605 BILLION | 0.48 BILLION |
PROFIT AFTER TAX | 0.45 BILLION | 0.49 BILLION | 0.26 BILLION |
RETAINED EARNINGS | 1.2 BILLION | 0.41 BILLION | 0.264 BILLION |
TOTAL ASSETS | 6.5 BILLION | 6.57 BILLION | 24 BILLION |
EQUITY INVESTMENTS | 0.32 BILLION | 0.18 BILLION | |
UNEARNED PREMIUM | 1.12 BILLION | 1.25 BILLION | 1.85 BILLION |
Jubilee’s Profit After Tax romped 101% thanks to their huge equity investments as 2010 was a brilliant year at the NSE. Jubilee recorded Net Fair Value gains on financial assets through the P&L of Kshs. 1.633 Billion as opposed to Kshs. 322 Million the previous year
Of the 8 companies, Jubilee had the highest Net Premiums Earned but this was bogged down by them also having the highest Net Claims and Benefits. But management ensured that all was well as at end year thanks to their superior returns on investments. Jubilee had an Investment Income of Kshs. 2.15 Billion, second to only British American Insurance, which registered an Investment Income of Kshs. 2.68 Billion. Jubilee also had the highest unearned premiums. The company is looking at expanding into 14 new markets by 2014.
Recently Listed by Introduction CFC Insurance Holdings was the least profitable among the 8 companies, with a Profit Before Tax of Kshs. 480 Million
A notable observation is the amount of Equity Investments by CIC Insurance. The company had a subdued equity portfolio as at the end of the financial year, in comparison to its peers. This may be a pointer that the company is keen on achieving profitability through its core insurance business. The company achieved an underwriting profit of Kshs. 1.45 Billion. This is no mean feat as its Net Premiums Earned is only higher than one out of the 7 companies. CIC are likely to take huge advantage of the impending expansion of The Co-operative Bank of Kenya. The bank benefits immensely from the active cooperative movement in Kenya, and is looking to tap regional opportunities. CIC has been registering massive growth in the past couple of years. Its future looks very bright as it seeks to tap into the growing middle class, who need cover. CIC Insurance announced recently that it has raised money to set up offices in Malawi, Rwanda and South Sudan
The norm across the industry was for companies to use their premiums to make investments. In this regard, Pan Africa Insurance Holdings did not disappoint. Pan Africa Life, which built and sold 20 houses in Runda Estate last year, is planning to build 60 more. The company benefitted from the real estate market. They gave a 1:1 bonus and a 3/= dividend after profits surged from Kshs. 174 Million to Kshs. 665 million. They also plan to sell 40% of its stake in APA insurance. Coupled with their real estate investments, it seems it’s going to be a brilliant couple of years to come from them
British American Insurance’s parent company, British American Investments, is planning to list soon at the Nairobi Stock Exchange, providing investors an opportunity in owning this piece of the pie, which had a Profit Before Tax of Kshs. 1.04 Billion
UAP Holdings had impressive Net Premiums Earned of Kshs. 4.27 Billion
Lion of Kenya Insurance Company had the least Net Premiums Earned of Kshs. 1.08 Billion but still managed to beat the likes of CIC and CFCIH in Profit Before Tax due to having less expenses and commissions payable
JUBILEE | KENYA RE | BRITISH AMERICAN | UAP | PAN AFRICA | LION | CIC | CFCIH | |
| PERCENTAGE CHANGES FROM FULL YEAR 2009 | ||||||||
NET PREMIMS EARNED | +8% | +23% | +12% | +24% | +26% | -4% | +41% | +104% |
NET CLAIMS AND BENEFITS | +41% | +12% | +94% | +24% | +33% | -30% | +35% | +84% |
UNDERWRITING LOSS/PROFIT | -127% | +36% | -112% | +24% | -5% | +92% | +49% | +215% |
INVESTMENT INCOME | +63% | +50% | +219% | +120% | +139% | +18% | +33% | +394% |
TOTAL INCOME | +39% | +31% | +56% | +37% | +43% | +2% | +45% | +156% |
EXPENSES AND COMMISSIONS | +15% | +62% | +3% | +28% | +43% | +15% | +40% | +78% |
PROFIIT BEFORE TAX | +83% | +13% | +106% | +182% | +283% | +65% | +118% | +177% |
PROFIT AFTER TAX | +101% | +16% | +121% | +218% | +324% | +75% | +106% | +137% |
RETAINED EARNINGS | +43% | +20% | +69% | +18% | +103% | +33% | +86% | +191% |
TOTAL ASSETS | +27% | +15% | +48% | +26% | +39% | +15% | +88% | +94% |
EQUITY INVESTMENTS | +32% | +28% | +42% | +44% | +78% | +157% | ||
UNEARNED PREMIUM | +40% | +34% | +26% | +24% | +12% | +108% | +612% | |
In conclusion, the insurance industry in Kenya has massive opportunity for growth considering penetration is still very low.
I was in the audit team for jubilee and british american and those figured quoting are completely wrong, particularly for british american which made a profit of 2.9 billion last year. the figures from jubilee and britak would make the rest seem like dwarf, with exception of CIC and CFC
ReplyDeleteAnonymous, there is a difference between British American Insurance and British American Investment Company, which is a holding company of a group of businesses including British American Insurance. British American Investment Company made a pre-tax profit of 2.87 Billion while British American Insurance (Which I was analysing) made a pre-tax profit of 1.037 Billion
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