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ZEP-RE MD Hope Murera, ZEP-RE Chairman William Erio, COMESA Secretary General Chileshe Kapwepwe, and PS Trade Dr. Chris Kiptoo look through the company's financial report at the 28th Annual General Meeting in Nairobi/Courtesy

Kenya

PTA Re-Insurance hit by rise in cost of doing business and reduced margins

ZEP-RE MD Hope Murera, Chairman William Erio, COMESA Secretary General Chileshe Kapwepwe, and PS Trade Dr. Chris Kiptoo look through the company’s financial report at the 28th AGM in Nairobi/Courtesy

Nairobi: 24 June, 2019 – ZEP-RE (PTA Reinsurance Company) recorded a drop in profitability to US$10.14 million in 2018. This has been attributed to pricing pressures and a generally lower insurance penetration.

The company also experienced a significant rise in claims, a region-wide phenomenon that saw most of the regional markets make losses at both insurance and reinsurance level. Despite an increase in loss ratio the company still realised a profit.

A marked growth in written premium in the financial year ending December 31, 2018 of US$178.5 million up from US$152.1 million recorded in 2017, representing a 17% growth.

Speaking at the Company’s 28th Annual General Meeting, that was officially opened by Trade Principal Secretary, Dr. Chris Kiptoo, representing Cabinet Secretary for Industry Trade and Cooperatives Peter Munya, ZEP-RE Chairman William Erio said unlike previous years exchange rates for most local currencies were stable and resilient during the year save for a few currencies which depreciated.

“The combination of the deterioration of loss experience and currencies depreciation impacted on the company’s profitability reducing the realised profit in 2018. These challenges have had the direct impact of increasing the cost of doing business and a reduction in margins. This is reflected in the industry performance in 2018 which was one of the few years with record high losses,” Erio told shareholders.

Total income (net earned premium, investment income, commission earned and other income) for the year 2018 dropped by 9.6% to US$148 million up from US$135 million recorded in 2017. Gross claims however increased from US$83 million in 2018 up from US$66 million in 2017. Total assets grew by 2.8% to reach US$383.9 million, total liabilities rose by 5.68% to US$154.2 million, with shareholders’ funds hitting US$300 million in 2018.

“The strong balance sheet has been key in helping the company provide security to market players in the region and maintain its investment grade credit rating of B++ (AM Best) and a claim paying ability rating of AA+ (GCR Ratings),” said Erio.

ZEP-RE Managing Director Hope Murera said the company recorded growth in its key markets of Kenya, Zimbabwe, India, Uganda, and Tanzania supported mainly by growth in motor and medical classes.

“ZEP-Re also has a growing international reputation in underwriting infrastructure projects, property, casualty, life, and marine. These sectors continue to support and sustained our growth,” she said.

Dr. Kiptoo lauded the role played by ZEP-RE in supporting and positively transforming the local and the region’s insurance industry.

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“We note with gratitude large claim payouts you have made to businesses in Kenya including payouts to small scale traders at Gikomba market, the JKIA airport fire claim, the Westgate terrorism claims, and now the Dusit terror attack. As a government we are looking up to insurance and re-insurance companies like ZEP-RE to support our Big Four Agenda aimed at transforming Kenya into a newly industrialized country,” Dr. Kiptoo said.

Kenya is a founder signatory member state of ZEP-RE and currently hosts the headquarters of the Company in Nairobi

Commending ZEP-RE for sustained performance over the years, Common Market for Eastern and Southern Africa (COMESA) Secretary General Chileshe Mpundu Kapwepwe said the company had remained true to its developmental role as outlined in its founding objectives. Kapwepwe said COMESA supports ZEP-RE’s efforts to promote insurance inclusivity and financial deepening in the region.

“ZEP- RE has submitted recommendations on how we can grow insurance inclusiveness within the COMESA region and we are willing to support the initiatives to ease access to insurance especially by the low- middle income population,” said Kapwepwe.

The Board has recommended a dividend of US$2.5 million for 2018.

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