By: MOSES OMUSOLO
Insurance sector continues taking a revenue free fall, owing to the high interest rates and shilling depreciation, an industry survey says.
The survey, released by Cytonn Investments on Monday, indicates that listed insurance companies —compared to their non-listed counterparts — are gradually succumbing to heavy losses and are at risk of bankruptcy.
“Kenya ranks at par with global players in most metrics, despite low penetration. However, in terms of losses –loss ratio and combined ratio – we are materially sub-par,” Maurice Oduor, Cytonn’s investment manager, said.
The loss ratio has increased marginally to 62.5 per cent, up from 60.9 per cent the last year, while the solvency ratio has increased to 25.8 per cent.
Consequently, insurers were scoring poorly on profitability and efficiency but reading well on the ability to meet their short-term and long-term liabilities.
“Hence non-listed insurance companies are becoming more efficient at asset utilisation to derive premium growth – they have 39 per cent of assets, but have 52 per cent of premiums,” Mr Oduor explained.
According to the analysts, it is only safer now to buy from Kenya Re as the rest get less favourable recommendations. Such companies include Jubilee Holdings, Britam, Pan Africa, CIC Group, as well as Liberty Kenya.
With banking stocks getting cheaper than insurance’s, investors are advised to invest in banks.
SOURCE: DAILY NATION