Kenya: Higher premiums lift Absa Life profit 84%

Absa Life Assurance Kenya has posted a Sh245 million in net profit for the year ended December, an 84% jump attributed to higher premium collections that outpaced claims payments and policy surrenders.

The Absa Group subsidiary profits rose from Sh133 million in 2020 driven by a 44.7% jump in premiums to Sh5.5 billion. The firm said the premium increase came from a government scheme as well as growth in corporate and education policy portfolios.

Absa Life managing director Githanji Waiguru said the firm will continue to introduce innovative and diverse channels of delivery, including banc-assurance, agents, intermediaries, microfinance partners, SMS, and USSD to further drive premium growth.

“For the period, Absa Life’s gross written premium of Sh5.5 billion was 45% higher, on the account of business from the government scheme, education policy, and growing corporate business,” Mr. Waiguru said.

Interest income also contributed to the bottom line, rising to Sh593.9 million from Sh476 million. The insurer has most of its assets in government fixed-income securities.

It also has a small allocation to fixed deposit accounts with financial institutions.

The growth in premiums outpaced growth in maturing claims which increased from Sh1.2 billion to Sh2.1 billion.

Refunds on policy surrenders also grew modestly from Sh550 million to Sh612.6 million while operating costs increased 7.5% to Sh1.4 billion.

Mr. Waiguru said the operating expenses grew on account of premium levies and taxes, training as well as marketing and advertising. These expenses were offset by savings in employee costs resulting from delayed replacements of staff.

He said looking ahead, the accounting standard IFRS 17 remains the most significant development for the insurance industry. It is set for implementation on January 1, 2023, that will require investments in systems and human resources to attain compliance.

“The rollout of the standard will demand robust new systems and data capture processes, upskilling of our people, and involvement of multiple stakeholders beyond those finance roles. As a business, we are on track towards the implementation of this major new standard,” Mr. Waiguru said.