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Financials

Chairman’s Statement

The economy is estimated to have grown at between 5.0%-5.5% compared to 5.7% in 2014. The growth in 2015 was supported by robust growth in agriculture, construction, financial activities, trade and transportation sectors. Lower oil prices had a positive impact on GDP growth, inflation and currency. The lower oil prices supported the currency by reducing the import bill. Oil imports accounted for approximately 30% of Kenya’s import bill at the previous higher global oil prices and have since contracted to account for 16% of Kenya’s import bill. The 2016 economic growth is expected to be positive on account of continuation of infrastructure projects, recovery of the tourism sector, increased output from the manufacturing sector as it enjoys lower power costs and stronger agricultural output.

The Kenyan Shilling lost 12.9% in value against the US dollar due to the strengthening of the dollar in real terms, rising import demand for infrastructure projects and capital outflows from frontier markets investors’ risk aversion. A higher amount of forex reserves at 4.6 months of import cover and a tightening monetary policy, especially in the 4th quarter of 2015 that saw Treasury Bills touch a high of 22%, stabilized the Kenyan Shilling.

The overall inflation remained fairly stable in 2015, averaging at 6.6% and increased to 8.01% in December 2015 from an average of 6.7% in 2014 (6.02% in December 2014). The increase was partly due to the implementation of the new Excise Bill in December 2015 but was stabilized by lower oil and electricity prices experienced towards the end of 2015.

The Insurance Industry recorded gross written premium of Kshs 157.21 Billion in 2014 compared to Kshs 130.65 Billion in 2013. The industry recorded a profit of Kshs 15.46 Billion before tax in 2014 compared to Kshs 17.79 Billion in 2013. The overall insurance penetration in 2014 was 2.93% compared to 3.44% in 2013. The decrease in penetration was due to the rebasing of GDP in 2014. The figures for 2015 are not yet out.

During the year under review, the company achieved an increase of 3.49% in gross premium of Kshs 1.907 Billion up from Kshs 1.843 Billion in 2014 despite various challenges. The asset base of the company has grown from Kshs 2.5 Billion to Kshs 2.7 Billion, say 5.5% increase. The company continues to post good results with an underwriting profit of Kshs 157 Million during the year against Kshs 101 Million in 2014, registering an increase of 54.63%. The overall profit before tax currently stands at Kshs 297 Million as against 289 Million in the previous year an increase of 2.86%.

The Board and Senior Management Team carried out a Strategic Plan Retreat at the beginning of the year to chart the road ahead for the next 5 years. I am confident that the company shall achieve various milestones while pursuing the Strategic Plan.

Training and development of human resource continue to be a priority in our activities. During the year, we did carry out various trainings at all levels of staff to enhance skill and professionalism including team building workshop for all staff members. These training programs have covered all aspects of our business and will continue in future.

Our sports team did well in last year’s AKI sports. There have been few notable individuals performance too. We congratulate all members who participated in the event and wish them success in future.

In regard to our corporate social responsibility, we have donated to various bodies including Her Excellency The First Lady’s Beyond Zero Campaign for the early maternal childhood deaths. We participated in the AKI medical camp in Kirinyaga. We have also sponsored education through the construction of classrooms, donation of wheelchairs and crutches, textbooks, stationeries and other food items, provision of tents to women and youth groups among others. These have gone to various schools like Waita School for the Disabled, Christcare Children’s Home -Ololoitikoshi, Kiserian, Ndovea Small Home for the Disabled, St. Francis of Asis, Ruaka, Kwandiu Primary School, Rotary Club Peponi and a water tank to Katunyoni Community School in Makueni. May God bless them.

Finally, I wish to extend my sincere appreciation to the Board of Directors for their wise counsel, Employees for their dedication throughout the year, Intermediaries and Customers for their continued support. I also thank the Insurance Regulatory Authority for their support and guidance and expect the same in future while assuring them of our commitment to the industry’s development in all respects.

Jimnah M. Mbaru

Chairman