Kenyan insurance sector record 11.9% declines in H1

The Kenyan insurance sector has encountered a significant decline of 11.9% in profits after tax in the first half of the year, according to a report by investment firm Cytonn. Despite having 51 insurers serving a population of 47 million people, the insurance penetration in the country remains a mere 3%. The report highlighted that CIC Insurance Group emerged as the topmost attractive insurer, followed by Kenya Re, Jubilee Holdings, and Sanlam. Maurice Oduor, Investment Manager at Cytonn Investments, shed light on the current scenario during a CNBC Africa interview. He attributed the decline to the performance of the securities market, citing negative trends in both the equity and bond markets. Oduor emphasized the need for insurers to diversify their revenue sources to sustain growth amidst market challenges. The shift towards alternative assets was mentioned as a strategy being adopted by companies to counter the impact of market fluctuations. The report also noted a notable improvement in the performance of CIC Insurance Group, which rose from fourth place to the top spot. The advancement was linked to enhancements in the medical sector and technological improvements in underwriting processes. The emphasis on franchise value and future growth opportunities propelled CIC to the number one position. The significance of life insurance was underscored by a 17.9% compound annual growth rate (CAGR) over five years. This growth rate indicates a positive trend in premium generation, a crucial metric for insurance companies in the region. With the insurance penetration rate at a modest 3%, there is potential for substantial growth in premium revenue if efforts are made to enhance penetration rates. Maurice Oduor highlighted the opportunity for the sector to achieve significant growth, potentially doubling premium revenue levels to reach 20% with a focus on improving insurance penetration rates. The challenges faced by the Kenyan insurance sector call for strategic adaptations and innovations to navigate the volatile market conditions and capitalize on growth opportunities.