In H1’2021, the Insurance sector’s gross premiums recorded a 19.0% growth to Kshs 144.0 bn, from Kshs 121.0 bn in H1’2020, with the claims increasing by 22.5% to Kshs 71.8 bn, from Kshs 58.7 bn in H1’2020. Insurance uptake in Kenya remains low compared to other key economies with the insurance penetration coming in at 2.3% as at December 2020, according to the September 2021 Financial stability report by Central Bank of Kenya (CBK). The low penetration rate, which is below the global average of 7.4%, is attributable to the fact that insurance is still seen as a luxury and mostly taken when it is necessary or a regulatory requirement.
The table below highlights the performance of the listed insurance sector, showing the performance using several metrics, and the key take-outs of the performance;
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Listed Insurance Companies H1'2021 Earnings and Growth Metrics |
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Insurance |
Core EPS Growth |
Net Premium growth |
Claims growth |
Loss Ratio |
Expense Ratio |
Combined Ratio |
ROaE |
ROaA |
|
CIC Group |
177.3% |
0.5% |
7.0% |
81.3% |
50.8% |
132.1% |
3.4% |
0.6% |
|
Jubilee Holdings |
146.2% |
10.0% |
42.1% |
109.6% |
30.4% |
140.0% |
12.5% |
3.1% |
|
Britam Holdings |
123.0% |
2.4% |
15.8% |
78.5% |
79.4% |
157.8% |
1.7% |
0.3% |
|
Sanlam Kenya |
68.8% |
45.9% |
64.9% |
92.8% |
47.1% |
140.0% |
(19.3%) |
(0.9%) |
|
Liberty Holdings |
(20.4%) |
(5.7%) |
32.5% |
75.0% |
84.3% |
159.3% |
3.1% |
0.7% |
|
*H1'2021 Weighted Average |
127.6% |
6.3% |
29.1% |
92.8% |
53.8% |
146.6% |
6.2% |
1.6% |
|
**H1'2020 Weighted Average |
(280.5%) |
5.1% |
6.5% |
75.0% |
48.8% |
123.8% |
2.0% |
0.6% |
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*Market cap weighted as at 11/11/2021 |
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**Market cap weighted as at 30/09/2020 |
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The key take-outs from the above table include;
- Core EPS growth recorded a weighted growth of 127.6%, compared to a weighted decline of 280.5% in H1’2020. The increase in earnings was attributable to increased premiums during the period following robust recovery by the sector from the COVID-19 pandemic, coupled with gains recorded in the equities markets and higher yields from government papers,
- The premiums grew at a faster pace of 6.3% in H1’2021, compared to a growth of 5.1% in H1’2020, while claims grew at an aggressive faster rate of 29.1% in H1’2021, from the 6.5% recorded in H1’2020 on a weighted average basis,
- The loss ratio across the sector increased to 92.8% in H1’2021, from 75.0% in H1’2020, owing to increased claims in insurance sub sectors such as motor and medical and perennial challenges facing the industry such as fictitious claims and increased benefit payments from the life business owing to job layoffs,
- The expense ratio increased to 53.8% in H1’2021, from 48.8% in H1’2020, owing to an increase in operating expenses,
- The insurance core business still remains unprofitable, with a combined ratio of 146.6% as at H1’2021, compared to 123.8% in H1’2020, and,
- On average, the insurance sector delivered a Return on Average Equity (ROaE) of 6.2%, an increase from a weighted Return on Average Equity of 2.0% in H1’2020.
The table below ranks Insurances based on franchise and intrinsic ranking which compares metrics for efficiency, growth, and profitability, among other metrics:
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Listed Insurance Companies H1'2021 Comprehensive Ranking |
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Insurance Company |
Franchise Value Score |
Intrinsic Value Score |
Weighted Score |
H1'2021 Ranking |
FY'2020 Ranking |
|
Jubilee Holdings |
13 |
1 |
5.8 |
1 |
2 |
|
Sanlam Kenya |
22 |
2 |
10.0 |
2 |
3 |
|
Liberty Holdings |
23 |
3 |
11.0 |
3 |
1 |
|
Britam |
24 |
4 |
12.0 |
4 |
5 |
|
CIC Group |
23 |
5 |
12.2 |
5 |
4 |
Major Changes from the FY’2020 Ranking are;
- Jubilee Holdings improved to position 1 in H1’2021 from position 2 in FY’2020 mainly due to the improvement in the franchise score in H1’2021, driven by reduction in expense ratio to 30.4% in H1’2021, from 56.3% in FY’2020. As a result, the combined ratio also declined to 140.0% in H1’2021, from 157.6% in FY’2020,
- Sanlam improved to position 2 in FY’2020, from position 3 in H1’2020 mainly due to an improvement in its expense ratio to 47.1% in H1’2021, from 54.2% in FY’2020,
- Liberty declined to position 3 in H1’2021, from position 1 in H1’2020 mainly due to declines in both the franchise and intrinsic value scores,
- Britam Holdings improved to position 4 in H1’2021, from position 5 in FY’2020 mainly due to the improvement in the franchise score in H1’2021, driven by reduction in loss ratio to 78.5% in H1’2021, from 85.7% in FY’2020,
- CIC Group declined to position 5 in H1’2021, from position 4 in FY’2020, on the back of a weaker franchise score driven by deterioration of its loss ratio to 81.3% in H1’2021, from 71.4% in FY’2020, and combined ratio to 132.1% in H1’2021, from 121.5% in H1’2020.
For a more comprehensive analysis, see our Kenya H1’2021 Listed Insurance Report.
