Kenya Re’s net profit in the six months to June fell 10 percent to Sh1.06 billion, as foreign exchange losses eroded higher income from reinsurance and local investments.
The Nairobi Securities Exchange-listed reinsurer reported a net foreign exchange loss of Sh800.25 million in the period, compared to a profit of Sh561.9 million in the previous year.
Kenya Re operates in many countries and is therefore exposed to foreign exchange risk as it receives insurance premiums in many currencies, including the US dollar.
In the first half of the year, the shilling strengthened against other currencies globally, including a 20.8% rise against the dollar. This reduced the value of foreign currency holdings in companies’ hands, as well as foreign currency earnings.
Kenya Re’s investment income before foreign currency adjustment rose 24.5 percent to Sh2.66 billion, helped by higher interest income from cash deposits and government bonds.
However, net investment income declined by 31 per cent to Sh1.86 billion due to net foreign exchange losses.
Meanwhile, the company’s underwriting income rose to Sh606.6 million from a deficit of Sh210.6 million in the first half of last year.
Premium income rose 20% to Sh10.3 billion, while claims and other underwriting expenses rose 7.7% to Sh9.5 billion. Operating expenses rose 8.2% to Sh1 billion during the period.
Reinsurance assets fell slightly to Sh65.6 billion. Holdings of government securities increased by Sh3.7 billion to Sh24.8 billion, while deposits with financial institutions fell by Sh4.7 billion to Sh12 billion.
The company does not pay interim dividends for the first half of the year, as in previous years.
On August 9, a cash dividend of Sh0.30 per share was paid to the company’s shareholders for the full financial year ended December 31, totalling Sh839.9 million.
Shareholders are also entitled to a bonus of one share for each share they own, as approved at the company’s annual general meeting held on June 25.