NAIROBI, Kenya, Mar 23 – Resolution Health has posted a 16 percent increase in its 2010 profit which stood at Sh207.9 million compared to Sh179.4 million a year earlier.
Releasing the results, Resolution Health Chief Executive Officer Peter Nduati attributed the rise in profit to increased revenues.
During the year, Resolution Health posted an underwriting profit of Sh282 million and an investment income of Sh30 million. This saw revenue figures grow to Sh1.1 billion compared to Sh983.8 million in 2009.
“Our strong performance in 2010 demonstrates that our focused growth strategy is producing sizable returns. We are committed to being the medical insurance industry leader in customer service and financial performance through provision of innovative products,” Mr Nduati said.
During the year, claims grew by 16.3 percent with Resolution Health spending Sh671 million in funding the health care needs of its clients. This was attributable to the growth of its client pool.
Resolution Health early this year announced that the German-based private equity fund, Africa Development Corporation(ADC) had bought a 25.1 percent stake in the company for Sh184 million raising its core capital to Sh224 million.
The injection of capital is expected to fund its expansion program in the region.
Resolution Health plans to turn is Tanzanian subsidiary into a fully-fledged medical insurance company and open another one in Uganda by the end of the year.
The medical insurer is also eying two insurance firms in the local market as it seeks to gain market leadership.
However, Mr Nduati raised concern that inflation in the country was putting pressure on the ability of Kenyans to afford medical insurance.
He said that hospitals have over the years been raising the cost of medical services that has seen medical insurance providers adjust their costs to match the increase.
“Any medical provider will justify medical inflation. They will say the costs of drugs are high and the general cost of doing business in Kenya is high. The hospitals will justify all these costs and pass this through to patients,” Mr Nduati said.
He said it has been difficult for medical insurers to negotiate appropriate rates with the hospitals that have formed interest groups that make it difficult to bring hospitalisation costs down.
Mr Nduati said there was urgent need to have proper regulations in place that cushion patients from price volatility.
“The cartel nature in which some hospitals operate locks out medical insurers. The medical inflation has been growing at an average of 20 percent over the years,” he said.
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