AAR ranked most profitable firm in general insurance

AAR Insurance Kenya has been ranked as the most profitable underwriter in the country, paying the smallest fraction of premiums as claims from customers in the general insurance business. The firm’s claims ratio was the lowest at 37.7 percent in the quarter ended June, according to statistics from the Insurance Regulatory Authority (IRA).

Lower claims means an insurer is likely to make a profit from the underwriting business after taking into account other operating expenses.

Insurers’ consolidated earnings are, however, also supplemented by investment income.

AAR was followed by Tausi Assurance Company whose claims ratio was 39.1 percent, Trident Insurance Company (41.6 percent), The Kenyan Alliance Insurance (44.7 percent) and Mayfair Insurance Company (46.9 percent). Occidental Insurance is ranked as the least profitable, with the company paying out 87.1 percent of all the premiums it receives. It incurs the highest claims in its engineering, domestic fire and marine insurance contracts.

The next least profitable underwriter is Madison Insurance Company with a claims ratio of 86.3 percent, followed by Allianz Insurance Company (79.8 percent), Kenindia Assurance Company (74.2 percent) and Pacis Insurance Company (72.4 percent).

Among insurers listed on the Nairobi Securities Exchange, Sanlam is the most profitable with a claims ratio of 59.4 percent. It is followed by Britam (63.2 percent), CIC (67.2 percent) and Jubilee 69.4 percent.

The IRA data shows that insuring private motor vehicles is the least profitable for general insurers as a whole, with the category consuming 78.4 percent of the premiums collected.

While a few insurers are incurring claims as low as 32 percent in this business, other are paying multiples of what they collect as premiums, hurting their bottom-line. Workmen’s compensation is the most profitable business for the 37 companies offering general insurance covers, with the segment recording claims at the lowest rate of 25.5 percent.