NAIROBI, KENYA, MAY 5, 2016 – Cytonn Investments Management Limited has today released the Full Year 2015 Insurance Report, which for the second report in a row ranks Kenya Reinsurance as the most attractive insurance company from both a potential return and financial health perspective.
“The analysis is brought about by a need to make actionable recommendations to our investors, by considering which listed insurance companies are the most stable and also those which have the best franchise value and future growth potential,” said Elizabeth Nkukuu, Cytonn’s Chief Investment Officer. “While the sector remains attractive with vast potential, we have witnessed the insurance sector grappling with low penetration, alongside slowing premium growth, increased cases of fraudulent claims and the required increase in capital following adoption of a risk based capital adequacy framework. We hence chose a theme for our report "Given turbulence in banking, is all well in insurance?" Given the changing dynamics in the insurance sector, and banking and financial services as a whole, one would hope that regulation and oversight in the insurance sector is up to speed” added Elizabeth.
The report, released twice every year, covers the health and future expected value of the listed insurance institutions by highlighting their performance using metrics to measure profitability, efficiency, growth, governance and sustainability. Analysis is conducted on each listed insurance counter to determine their financial health, which is combined with target price recommendations for each company, to give a composite score that determines the ranking.
“Kenya’s insurance sector has seen robust growth over the years, supported by the adoption of alternative channels such as bancassurance, innovation such as payment of premiums through mobile phones, and a growing middle class increasing the demand for financial products” said Maurice Oduor, Cytonn’s Head of Investments for Public Markets. “However, with the tough operating environment witnessed last year, and the exposure of insurance firms to the public markets, especially the bond markets, we
witnessed the insurance sector recording a decline in core Earnings Per Share (EPS) growth of 39.1%, which was much lower than 7.6% growth that was witnessed in 2014,” added Maurice Oduor.
The report is available online Cytonn FY'2015 Insurance Sector Report.pdf
Table: Cytonn FY’2015 Insurance Report Rankings:
Rankings for full year 2015 remain almost the same as half year 2015, except that CIC moved from # 5 to #4, displacing Britam, which has dropped from # 4 to # 5.
| Company | Franchise Value Total Score | Total Return Score | Composite FY’2015 | FY’2015 | H1’2015 |
| Kenya Re Insurance | 22 | 1 | 9.4 | 1 | 1 |
| Jubilee Holdings | 31 | 4 | 14.8 | 2 | 2 |
| Liberty Kenya | 36 | 2 | 15.6 | 3 | 3 |
| CIC Insurance | 34 | 5 | 16.6 | 4 | 5 |
| Britam Holdings | 42 | 3 | 18.6 | 5 | 4 |
| Pan Africa Insurance | 45 | 6 | 21.6 | 6 | 6 |
| Source: Cytonn Investments | |||||
