NAIROBI,
KENYA, MAY 8, 2017. Cytonn Investments Management Limited has today
released the Full Year 2016 Insurance Report, which ranks Kenya Reinsurance as
the most attractive insurance company from a financial health perspective. The
franchise score measures the broad and comprehensive business strength of the
company and the intrinsic score measures the return potential. Sanlam Kenya
ranked lowest, ranking lowest in both franchise and intrinsic value score.
The report
themed “Operational Efficiency & Product
Innovation key to Growth of the Sector in an era of Heightened Regulation” saw
CIC drop from top position to rank 4th,
affected by a poor return on average tangible equity, low levels of
diversification and high reserve leverage. Sanlam retained its bottom position
plagued by poor return on tangible equity, low solvency ratio, low underwriting
leverage, and a high reserve leverage. On potential return, Liberty Holdings
and Britam Holdings held the first and second positions with total potential
returns of 21.3% and 20.8%, respectively, while Sanlam Kenya registered the
lowest total potential return, with a downside of 14.9%
Speaking during
the report release, Cytonn’s Chief Investments Officer Elizabeth N. Nkukuu,
CFA, said that the analysis is brought about by a need to make actionable
recommendations to investors, by considering which listed insurance companies
are the most stable and also those which have the best franchise value and
future growth potential. “Technology and innovation is a driving factor in the
sector and thus we expect improved
product innovation and operational efficiency in the sector to drive
profitability and thus growth of the sector amidst the heightened regulation.
The growth of
the middle class, adoption of alternative distribution channels and regional
expansion are also key contributors to the growth of the sector,” said
Elizabeth.
“Following the adoption of a risk based framework, the sector is set to
experience an increase in mergers and acquisitions and innovation of new
products targeting specific sectors. Premiums continue to experience strong
growth with growth in Life business premiums outpacing
General business in 2016. Despite the sector remaining
attractive with vast potential, we have witnessed the insurance sector
grappling with low penetration, with Kenya’s penetration standing at 3.0%
compared to South Africa’s 14.1%,” said Maurice Oduor, Cytonn’s Investments Manager.
The
report is available online: (link
here)
Table: Cytonn FY’2016
Insurance Report Rankings
|
CYTONN’S FY’2016 INSURANCE REPORT
RANKINGS |
|||||
|
Company |
Franchise Value Total Score |
Total Return Score |
Composite FY'2016 Score |
FY'16 Rank |
H1'16 Rank |
|
Kenya Re Insurance |
27 |
3 |
13 |
1 |
1 |
|
Britam Holdings |
33 |
2 |
14 |
2 |
3 |
|
Jubilee Holdings |
29 |
5 |
15 |
3 |
3 |
|
CIC Group |
34 |
4 |
16 |
4 |
1 |
|
Liberty Holdings |
41 |
1 |
17 |
5 |
5 |
|
Sanlam Kenya |
46 |
6 |
22 |
6 |
6 |
