CIC insurance group surged upwards in the first Half of 2016 to share the top spot with Kenya Re according to the Half-year 2016 Insurance Sector Report by Cytonn Investments, attributed to improvement in the expense and the combined ratios after the insurance company adopted advanced technology in the medical business.
Kenya-Re maintained its position at the top, as Jubillee Holdings dropped to 3rd while Sanlam remained in the bottom position in the total return category and franchise score category according to the report. Britam Holdings also shared the third position while Liberty Kenya Holdings came in 5th.
The report which majored on profitability, efficiency, diversification, risk appetite and solvency metrics to rank the insurance firms for the listed insurance companies in the country, based on a weighting average of 40% franchise value and a 60% weighting of the intrinsic score.
Previously ranked fourth in the previous index, CIC Holdings recorded a 4.4% rise in net profits for the year to KSh1.136 billion even as total income dropped to KSh13.8 billion from KSh14.5 billion in the previous year.
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According to Cytonn Investments the general growth in the sector dwindled in 2016 with the sector expected to introduce new innovations to improve their profits margins. “The growth in the sector was negative in the first half with the Profits After Tax declining by 11.9% for listed companies due to a high combined ratio of 127.3%…. we expect more synergy between banks and insurance companies to introduce bancassurance as well as integration of mobile money payments…“
The insurance sector balance sheet however managed to hit KSh501.6 billion in June 2016.
The 51 insurance firms in the country have only managed to serve 3% of the population compared to Africa’s average penetration of 3.5% according to Cytonn, as the necessity of insurance is still below average compared the need of other services such as banking.
By: Humphrey Ngugi H_NGUGI