Kenyan insurer CIC Group expects its Uganda and Malawi businesses to break even in the next two years, its chief executive officer said on Thursday.
The East African nation has a low rate of insurance penetration, with less than 10 percent of the population having any form of cover, attracting foreign firms like Prudential and Swiss Re, which have started operations in the last four years.
The firm, which offers life and general insurance as well as asset management services, said its business at home could face pressure before a Kenyan general election in August.
“In Uganda we started trading in 2015. We anticipate we will break even this year, in 2017,” Tom Gitogo, CIC Group Chief Executive Officer, told Reuters in an interview.
In Malawi, where the company also started operating in 2015, so 2016 was the first, Gitogo said they expected to break even in the next two years.
In Kenya, the chief executive said the medical insurance business, which made a profit of 80 million shillings ($775,494.38) last year after a streak of losses, was set to keep supporting growth.
“We see a good chunk of our growth in 2017 coming from the medical business,” he said.
In 2016, CIC was hit by its South Sudan operations, which lost 297.5 million shillings, due to hyperinflation in the country driven by conflict in the country. The company would maintain its presence there, the CEO said.
“CIC has taken the view to be in there and wait it out, rather than coming in later and paying a premium,” he said.
The main risk in Kenya was the vote in August. The country has a history of political violence during elections, causing nervousness among investors.
“Some of the huge projects that would otherwise be going on or starting have taken a back seat. Again that impacts insurance,” he said.
Gitogo said that this had also in turn led to an uptick in customers seeking political violence-related insurance cover, which is already popular especially for motor vehicle cover. “It is higher than the year before, looking at the first three months we have had this year,” he said.
A slowdown in private sector credit lending, after the government capped commercial interest rates last September, was also curbing business for CIC, Gitogo said.
“One of our services is to insure loans, so with the contracting of lending, we have seen that obviously impact our business growth,” he said.
($1 = 103.1600 Kenyan shillings) (Editing by Duncan Miriri and Pritha Sarkar)
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