Kenya Reinsurance Corporation (Kenya Re) has set up a year-end deadline to open up a subsidiary in Kampala, according to its Chief Executive Officer, Jadiah Mwarania.
Kampala, Uganda | ISAAC KHISA | Mwarania, who held an investor briefing in Nairobi on August.02 said the decision by countries such as Uganda, Tanzania and Ethiopia to set up own reinsurers had eaten into its market share.
Ibrahim Kaddunabi Lubega, the chief executive officer at the Insurance Regulatory Authority of Uganda confirmed to The Independent that Kenya Re has approached the regulator for licensing to carryout business in the Ugandan market.
“We have requested them to supply us with what we require and once they fulfil them, we should be able to grant them an operating licence,” he said in a phone interview.
According to the current Insurance Act, 2017, which emphasises Risk-Based Supervision, re-insurance firms are required to have Shs 9bn and Shs 6bn as minimum capital for those dealing in non-life and life respectively.
Successful entry of Kenya Re into the Ugandan market will tighten competition in the re-insurance business segment currently dominated by Uganda Re, Zep Re popularly known as PTA Re and the Africa Re.
Kenya Re said Ethiopian Airlines plane crash and the Dusit terror attack resulted in a 48.57% spike in claims and a 12.2% fall in net profit for the half year ended on June. 30.
The re-insurer blamed the rise in claims on the Ethiopian Airlines plane crash in March and the Dusit terror attack in January, for which the firm paid out Shs 1.5bn and Shs 1.54bn respectively. Kenya Re also paid Shs 1.54bn in claims for floods in Asian countries.
Net profit stood at Shs 37.8bn (US$10.5m) in the period, compared with Shs 43.1bn last year.
Better news was that Kenya Re posted a 40% rise in gross written premiums from Shs 222bn to Shs 310.8bn in H1-2019, compared to the corresponding period last year.
It attributed the growth to a rise in local agriculture business. The reinsurer obtains most of its gross premiums from the local market, where it will continue to enjoy mandatory cession of 20% until 2020.
Mwarania said the reinsurer is dealing with tougher competition from domestic reinsurers in countries like Ethiopia and Uganda, as well as new entrants.
He said: “Some of the challenges the corporation faced during the first half of the year 2019 [included] increased competition, premium undercutting, domestic reinsurance business in some of our key markets, changing reinsurance treaty structures towards excess loss as opposed to proportional treaties, and the devaluation of currency in some of our markets.”
To grow in new markets, Kenya Re has enhanced its capital to access business in the Middle East, North Africa and West Africa.