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HomeBusinessNSE dip cuts life insurers’ earnings by Sh10 billion

NSE dip cuts life insurers’ earnings by Sh10 billion


Capital Markets

NSE dip cuts life insurers’ earnings by Sh10 billion

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The Nairobi Securities Exchange trading floor. FILE PHOTO | NMG

Falling shares value on the Nairobi Securities Exchange (NSE) #ticker:NSE wiped out nearly a quarter of the income earnings of life insurers, new data by the Insurance Regulatory Authority (IRA) shows.

The insurers saw the worth of their shares drop to Sh35.86 billion last year from Sh46.58 billion the previous year on market volatility due to the economic knocks of the Covid-19.

“The decline in the value of equities was mainly due to volatility in the capital market caused by Covid-19 pandemic,” the IRA said in the industry’s quarter four release.

“Net commissions for the period was Sh6.11 billion while management expenses were Sh14.08 billion during the same period, which was an increase of 3.2 per cent and a decrease of 6.3 per cent respectively.”

Insurers have been the largest investors in the government securities and equities, which form a large share of their investment portfolios.

During the year, the industry held Sh461.88 billion in investments from long-term business operations, representing 11.1 per cent growth from the previous year.

Treasury bills and bonds accounted for 75.5 per cent or the equivalent of Sh348.55 billion, having increased by 22.2 per cent from the previous year.

Investment in listed shares dropped by Sh32.2 per cent in the year to Sh23.76 billion while those in private companies increased by 10.4 per cent to Sh7.36 billion.

However, the insurers are now reporting a significant drop in returns due to bond yields movements, valuation losses in equities and property.

ICEA Lion life assurance operations in Kenya, for instance, recorded a 46.6 per cent drop in net profit to Sh1.58 billion from Sh2.96 billion as investment income dropped by 18.8 per cent to Sh8.7 billion from Sh10.7 billion.

Britam Group Life assurance business saw a 48 per cent drop in income to Sh4.49 billion translating to a loss before tax of Sh3.43 billion from a Sh3.6 billion profit.

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