WHY KENYA RE'S GRIP SLIPPED IN 2016

Even though it was a year gross prenium insured grew by only 1.41% to 13244.9m Ksh, that final net premium earned rose by 5.58% to 12,686.8m Ksh must have given hopes of a happy ending for Kenya Reinsurance ltd in 2016 but unfortunately tbis was not realised.

Why? Simple, management grip slipped within the year such that in the end, Kenya Re settled for 6.56% decrease in profit to 4218.1m Ksh, not increase.

This was despite 5.40% drop in net claims to 6680.5m ksh; despite great leap in investment income to 3079.3m ksh and in spite of 7.6% increase in share of associated companies profit; and 11.5% rise fair value gain

The main issue was that as a reflection of slipped grip, bad debts provision took wings to land at 665m Ksh and operating expenses rose by 38.9% to 1832.4m Ksh.

Agreed, that Other income dropped by 78.1% to only 54.3m Ksh and tbat acquisition costs rose by 6.83% to 3635.3m Ksh may not be solely due to slipped grip but the some total of it all was that from an estimated 24.6% increase in total income, Kenya Re harvested 6.56% drop in profit before tax.

That worked out to 24.8% profit margin in 2016 compared to 33% in 2015.

Sure, being double digit, the 2016 margin was still very comfortable, the sharp decrease demands a fine comb to unearth the factors behind it and hopefully make room for a better 2017.

KENYA RE:      Kshm Full year
                           2016.           2015
Total income 17031.3.  13674.1
Net premium 12686.8.  12016.1
Invest income 3079.3.       304.1
Cost recovery.     36.2.         40.5
Fair value gain. 813.5.       729.6
Other income.      54.3.      248.1
Share of profits 361.2.      335.7
Net claims.       6680.5. 7061.6
Acquisition       3635.3. 3402.8
Other costs.     1832.4. 1319.0
Bad debts pro.   665.0.  113.6
Profit before tax 4218.1 4514.1
Margin %               24.8.     33.0

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