ZEP-RE Profit Soars Despite Global Economic Challenges

By Soko Directory Team / Published May 27, 2016 | 11:51 am

ZEP-RE (PTA Reinsurance Company) grew significantly in the financial year ending December 31, 2015, recording Ksh1.99 billion (USD19.9 Million) in net profit despite the harsh economic environment.

Speaking at the Company’s 25^th Annual General Meeting held in Mombasa, ZEP-RE’s Board Chairman Mr. William Erio said: “The year 2015 started with great promise but intervening negative pressures namely a slowdown in China (a key trading partner of the COMESA region), a fall in global commodity prices, uncertainty in the Eurozone (due to the Greek debt crisis) and a strengthening dollar turned the economic environment on its head. The global economic situation negatively impacted economies of the region resulting in slowdowns, reduced consumption and a weakening of local currencies against the dollar.”

In addition to the economic slowdown, the Company had to deal with the effects of two major earthquakes in Nepal, one of its major markets, which resulted in gross losses which amounted to Ksh2.3 billion (USD23 million) while net retained losses stood at Ksh400 million (USD 4 million).

“The fact that ZEP-RE withstood such a catastrophe is testament to the Company’s strong financial position and a versatile risk management system that includes an effective reinsurance programme,” the chairman added.

Commenting on the company’s performance, the Secretary General of the Common Market for Eastern and Southern Africa (COMESA), Mr. Sindiso Ngwenya said the company had remained true to its developmental role as outlined in its founding objectives.

“I am happy to note that ZEP-RE’s performance is attracting investors from within and outside the African continent. This can only bode well for the company and its growth goals,” Mr Ngwenya said.

Good performance

Gross written premiums rose by 10.6 percent to Ksh13.8 billion (USD 138.7 million) in 2015, built on the continued and systematic implementation of the company’s strategy of taking service closer to its customers.

The total income (net earned premium, investment income, commission earned and other income) for the year 2015 reached the highest level in the company’s history. Total assets grew by 21.4% to Ksh31.4 billion (USD310 million) and total equity rose by 18.1% to Ksh16.9 billion (USD169 million) over the 2014 results.

“We have recorded growth in our key markets of Kenya, Uganda, Sudan and India supported mainly by growth in infrastructure development in those markets,” ZEP-RE Managing Director Mr. Rajni Varia.

Tied to this demand for support of infrastructure development by ZEP-RE’s member countries, is the company’s growing international reputation in underwriting property, casualty, life, marine and motor businesses.

The company currently writes over 4000 treaties from 500 companies in 50 countries drawn from Africa, Middle East, and the Indian Sub-continent. In Eastern and Southern Africa, the company enjoys a greater goodwill as demonstrated by the 10% mandatory cessions being offered by governments of Kenya, Tanzania, Zambia and Uganda.

“Our business in the region is not limited to the 10% mandatory cessions as shown by increased additional gross premium we underwrote in Uganda and other markets in 2015,” said Mr. Varia.

The company expects to maintain strong growth in 2016 despite fall in oil & commodity prices and terrorism threats. This growth is expected to be driven mainly by a combination of factors including infrastructure investment and the expanding service sector in most member countries.

“The renewed business confidence globally coupled with a resilient and steady regional economy should help us consolidate and increase business currently underwritten in our core markets. This should put the ZEP-RE in good stead to achieve its business goals and objectives for the year,” Mr. Varia said.

Key Financial Trends: 2009 – 2015

	2009	2010	2011	2012	2013	2014	2015
Gross Premium Written	55,748,911	59,843,116	63,536,571	81,714,820	100,181,402	125,437,018	138,755,947
Net Written Premiums	44,266,616	46,042,768	49,846,359	66,307,584	83,964,961	105,888,455	116,235,351
Net Earned Premiums	40,214,408	44,361,208	46,489,807	60,683,391	77,695,433	96,367,104	110,275,997
Investment & other Income	8,253,469	10,117,026	11,083,593	15,255,819	14,921,584	17,619,892	18,875,457
Total Income	48,467,877	54,478,234	57,573,400	75,939,210	92,617,017	113,986,996	129,151,454
Claims Incurred	23,437,454	27,097,758	26,103,374	30,355,413	40,667,775	51,190,046	59,786,689
Commisions & other operating expenses	18,602,983	22,133,214	22,693,198	33,902,114	36,586,089	44,091,207	49,403,820
Profit for the year	6,427,440	5,247,262	8,776,828	11,681,683	15,363,153	18,705,743	19,960,945
Dividends Paid & Capitalized	1,200,000	1,311,000	1,573,200	2,359,800	3,226,200	4,115,300	4,500,000
Total Assets	87,128,548	103,110,370	130,337,123	154,088,372	201,843,403	255,731,818	310,496,459
Total Equity	44,474,180	49,987,272	66,656,019	78,774,839	105,728,865	143,586,785	169,683,104

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