Kenya’s insurers post 42% net profit decline in Q1 2025, hit by weaker investments and rising fraud, despite premium growth.
Kenya Insurers Post Sharp Earnings Decline in Q1 2025
After a strong close to 2024, Kenya’s insurance sector saw net earnings fall 42% in the first quarter of 2025, reaching KSh4.9 billion ($38 million) from KSh8.5 billion ($66 million) a year earlier, according to the Insurance Regulatory Authority (IRA).
The decline was even steeper compared with Q4 2024, when post-tax profits stood at KSh52.1 billion ($402 million) — representing a 90% drop quarter-on-quarter. The slump was largely driven by weaker investment returns, as gross investment income fell 22% to KSh43.7 billion ($388 million), despite insurers increasing their allocation to government securities, the largest component of their portfolios.
Long-term insurers recorded the strongest gains, generating KSh36.98 billion ($286 million), accounting for 89% of total returns in that segment. General reinsurance business posted the highest investment income at KSh1.51 billion ($11.7 million), the IRA noted in its latest insurance industry report.
Premium Growth Supports Balance Sheets
Despite softer investment returns, premiums and assets continued to expand. Long-term insurers reported gross premiums of KSh54.4 billion ($421 million), up 6.8% year-on-year. Their asset base grew 22.7% to KSh937.5 billion ($7.3 billion), with 95.2% invested in income-generating assets. Shareholders’ equity stood at KSh88.7 billion ($686 million), or 9.4% of the total.
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General insurers collected KSh75.6 billion ($585 million) in gross premiums, up from KSh69.8 billion ($538 million) a year earlier. Claims rose to KSh25.8 billion ($199.5 million), leaving the claims incurred loss ratio at 72%, similar to the previous year.
Reinsurers also posted gains. Long-term reinsurers grew net premium income by 9.1% to KSh1.12 billion ($8.6 million) from KSh1.01 billion ($7.8 million) in Q1 2024. General reinsurers reported an 11.8% rise in net premium income to KSh7.9 billion ($61.1 million), while paying out KSh4.3 billion ($32.2 million) in claims and KSh2.8 billion ($21.7 million) in direct expenses, including commissions and management costs.
The IRA said the result was an underwriting loss of KSh120.68 million ($930,000) and operating profit of KSh1.37 billion ($10.6 million) by the end of Q1 2025.
Fraud Cases Rise Quarter-on-Quarter
The weaker financial performance coincided with an increase in reported insurance fraud. Cases rose to 35 in Q1 2025, up from 29 in Q4 2024, though lower than the 55 cases in the same period last year.
Most incidents involved false motor accident claims, forged certificates, and theft by agents. Other cases included attempts to secure payouts under false pretences and theft by an advocate. The IRA noted that several suspects were arrested and charged following investigations with the Insurance Fraud Investigation Unit (IFIU).
Fraudulent claims remain a key driver of higher premiums for policyholders. The regulator has intensified efforts to tackle the problem through closer agent scrutiny, digital verification of certificates, and consumer education initiatives.
Key Takeaways:
- Kenya insurers’ net earnings fell 42% YoY in Q1 2025.
- Long-term insurers generated most investment returns.
- Premiums and assets continued to grow, supporting balance sheets.
- Insurance fraud rose, highlighting ongoing risks to profitability.