Kenya Reinsurance Corporation (Kenya Re) has announced that it will maintain a dividend payout of Sh839.94 million despite a decline in net profit by 10.8% for the financial year. The firm’s earnings dropped from Sh4.97 billion to Sh4.44 billion, primarily due to substantial foreign exchange losses.
The dividend payout translates to Sh0.15 per share, the same as the previous year, even after a recent bonus share issue that doubled the number of shares. Investors will receive an unchanged amount despite the profit retreat, signaling confidence in the company’s long-term stability.
Despite the earnings decline, Kenya Re experienced strong performance in its core insurance service revenue. Net underwriting income surged 4.4 times, reaching Sh2.95 billion from Sh676.96 million, marking one of the reinsurer’s best underwriting results in recent years.
However, the company’s net insurance and investment result dropped by 15.7% to Sh5.89 billion. A significant contributor to this decline was a foreign exchange loss of Sh1.68 billion, reversing from a gain of Sh1.4 billion in the previous year. The net forex loss of Sh3 billion weighed heavily on profitability.
“Our underwriting profit and investment income both grew, but our exposure to forex fluctuations significantly impacted our bottom line,” Kenya Re Managing Director Hillary Wachinga said.
Kenya Re, which holds extensive dollar-denominated assets, was adversely affected by the Kenyan shilling’s appreciation against the US dollar. The strengthening currency erased gains from these holdings, in contrast to the previous year when the shilling’s depreciation had worked in the company’s favor.
“We have dollar-denominated assets running into billions of shillings, with significant exposure to forex movements,” Wachinga noted, adding that bond investments, including Eurobonds, also saw a decline of nearly 30 basis points.
The reinsurer, which operates in over 80 markets with subsidiaries in Côte d’Ivoire, Zambia, and Uganda, remains optimistic despite the forex headwinds. Kenya Re’s diversified investment portfolio and expanding market presence are expected to provide stability in the face of currency volatility.
Looking ahead, the company is focusing on strategies to hedge against forex risks while strengthening its underwriting business. “The environment remains challenging, but we remain resilient,” Wachinga affirmed.
With steady dividends and solid underwriting growth, Kenya Re continues to demonstrate resilience despite macroeconomic challenges, ensuring shareholders remain confident in the company’s long-term outlook.
