NAIROBI, Kenya- Kenya Re-Insurance Corporation Limited (Kenya Re) is navigating a challenging financial landscape as it reports a 10pc drop in profits after tax for the first half of 2024.
The re-insurer’s profits fell to KSh 1.06 billion, down from KSh 1.17 billion during the same period last year.
This decline is largely attributed to a significant dip in investment income and a surge in operating expenses.
The sharp decline in investment income is the main culprit behind Kenya Re’s reduced profits. The corporation reported a 36pc fall in investment income, dropping to KSh 1.7 billion from KSh 2.6 billion in 2023.
This significant decrease overshadowed the 20pc growth in insurance revenue, which rose to KSh 10.3 billion in June 2024 from KSh 8.6 billion the previous year.
While insurance revenue saw impressive gains, the company’s operating costs also climbed.
Insurance service expenses increased by 8pc, reaching KSh 9.5 billion in June 2024 from KSh 8.8 billion in June 2023.
Despite these challenges, Kenya Re managed to turn around its net insurance service results, achieving a 388pc surge to a technical profit of KSh 0.6 billion, compared to a loss of KSh 0.2 billion the previous year.
Kenya Re’s financial performance was further impacted by foreign exchange losses, which stood at KSh 0.8 billion as of June 2024.
This contrasts sharply with the KSh 0.56 billion in forex gains recorded in June 2023, contributing to a 10pc decline in profit before tax, which fell to KSh 1.5 billion from KSh 1.7 billion in the same period last year.
The company’s asset base saw a marginal decline of 0.5pc, decreasing from KSh 65.9 billion in December 2023 to KSh 65.7 billion in June 2024.
However, shareholders’ funds increased by 1.5pc, rising to KSh 48.9 billion from KSh 48.2 billion at the end of 2023.
These financial shifts underscore the complex dynamics Kenya Re is contending with as it balances growth with economic headwinds.
In a positive turn, Kenya Re was upgraded to the Morgan Stanley Capital Index (MSCI) Small Cap Index, a move expected to enhance its visibility to foreign investors.
Despite this upgrade, the company chose not to declare an interim dividend in its half-year results, reflecting a cautious approach amid ongoing market volatility.
Kenya Re trades under the ticker symbol KENRE on the Nairobi Securities Exchange, where it closed the previous session at KSh 1.26—a year-to-date loss of 32.9pc.
With a market capitalization of KSh 3.5 billion, KENRE is the 30th most valuable stock at the Nairobi bourse, yet it continues to face pressure from a challenging market environment.
As Kenya Re navigates the remainder of 2024, the company will need to strategically manage its investment portfolio and operating costs to stabilize its financial performance and capitalize on the increased visibility from its MSCI upgrade.
