Dip in NSE stocks bites insurers
By John Otini, January 11, 2023Nairobi bourse chipped off close to 20 per cent of investment income for the insurance industry by the end of the third quarter of 2022 as foreigners opted for developed markets.
Data from industry regulator indicates that revenues from quoted ordinary shares dropped 27 per cent in the period forcing insurers to opt for government bonds and bills as the main source of revenue.
Investment income for long term insurance businesses dropped from Sh40 billion to Sh32 billion in the period under review.
Insurance Regulatory Authority (IRA) said in its third quarter report that investment income from general insurance also dropped from Sh9 billion to Sh8 billion.
Dip in investor income
“Investment income decreased by 20.8 per cent to Sh32.03 billion by end of Q3 2022 compared to Sh40.42 billion in the third quarter of 2021,” IRA said.
Lat year, the Nairobi Securities Exchange shed an estimated Sh600 billion between January and December as rising interest rates in developed nations, coupled with the devaluation of the shilling against the dollar, Euro, and Sterling Pound affected the flow of investors into Kenya, while others opted out of NSE.
Kenya government securities – Treasury bills and bonds – maintained their attractiveness to long term insurers comprising 77 per cent of the total long term insurers’ investments.
Total investments under long term insurance business as at end of September 2022 amounted to Sh586.73 billion, an increase of 15 per cent compared to Sh510.16 billion reported at the end of the third quarter of 2021.
Boosted by an economic rebound from the Covid-19 pandemic knocks, insurance premiums increased by 11.4 per cent to Sh237.9 billion in the third quarter of last year, compared to the same period in 2021.
The most recent data from the regulator, over a comparable time last year, premiums increased from Sh213.53 billion to Sh237.9 billion.
The expansion occurred at a time when companies were recovering from the economic damage the coronavirus had inflicted on them, which included business closures and decreased client visitation.
During that period, personal accidents recorded the largest decline from Sh2.12 billion to Sh2.02 billion.