Kenya Re’s net profit for the six months to June fell 10 percent to Sh1.06 billion as foreign exchange losses ate into higher income from reinsurance and domestic investments.
The Nairobi Securities Exchange (NSE)-listed reinsurer reported a net foreign exchange loss of Sh800.25 million in the period, reversing a profit of Sh561.9 million a year earlier.
Kenya Re operates in several countries and is therefore exposed to foreign exchange risk as it receives premiums in several currencies, including the US dollar.
In the first half of the year, the shilling strengthened against other currencies globally, including a 20.8 percent gain against the dollar. This has depressed the value of foreign currency holdings in the hands of companies, as well as earnings in foreign currency.
Kenya Re’s investment income before foreign currency adjustment grew by 24.5 percent to Sh2.66 billion, helped by higher interest income from cash deposits and government bonds.
On a net basis, however, investment income fell by 31 percent to Sh1.86 billion due to net foreign exchange losses.
Meanwhile, the company’s underwriting income rebounded to Sh606.6 million from a deficit of Sh210.6 million in the first half of last year.
Premium income increased by 20 percent to Sh10.3 billion, while claims and other underwriting expenses increased by 7.7 percent to Sh9.5 billion. Operating expenses increased by 8.2 percent to Sh1 billion during the period.
The reinsurer’s assets declined marginally to Sh65.6 billion. Holdings of government securities increased by Sh3.7 billion to Sh24.8 billion, while deposits with financial institutions decreased by Sh4.7 billion to Sh12 billion.
The company is not paying an interim dividend for the half year, as in previous years.
On August 9, the company’s shareholders were paid a dividend of Sh0.30 per share in respect of the full year to December 31, amounting to a total payout of Sh839.9 million.
Shareholders are also entitled to a bonus payment of one share for each share held, as approved at the company’s Annual General Meeting held on June 25.
