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Jubilee Insurance has been rated as the most attractive insurance company in Kenya mainly due to its return on investment and its financial health, a report by Cytonn Investment shows.

Sanlam Kenya, Liberty and Britam Holdings emerged second, third and fourth respectively in the ranking results released yesterday. CIC came in fifth on the back of a weak franchise rating score.

Jubilee Holdings, however, performed poorly on the loss ratio, which was the highest among listed companies.

Franchise score

According to the report, Jubilee Holdings emerged top in the franchise score category on the back of a strong combined ratio, indicating better capacity to generate profits from its core business.

Sanlam Kenya’s ranking was also on the back of a strong score, driven by the highest return on average equity, but for Liberty and Britam’s franchise scores were weak as a result of lower returns on assets and equity (Britam Holdings) and high loss and expense ratios.

Shiv Arora, Cytonn’s head of private equity, said the loss ratios of the insurance firms remain under control, however, the solvency ratios have been on a decline on the back of assets growth outperforming shareholders’ equity growth.

Arora said there is a need for the insurance firms to consolidate if they want to implement International Financial Reporting Standards (IFRS) 9 – which will address the classification and measurement of financial instruments, impairment and hedge accounting.

“While the sector remains attractive with vast potential, we have witnessed the insurance sector grappling with low penetration, increasedcases of fraudulent claims and the required increase in capital following the adoption of a risk-based capital adequacy framework,” said Arora.

With increased regulation,  said Arora, the loss ratio in the industry is coming down.