Insurers reduced their investments in companies listed on the Nairobi Securities Exchange (NSE) as the stocks continued to perform poorly forcing underwriters to redirect their outlays into better-performing asset classes.
The latest data from the Insurance Regulatory Authority (IRA) shows that long-term insurers cut their investments in quoted shares by 28.1 per cent in 2021 compared to 2021.
The disclosures show that the value of these investments by long-term insurers dropped sharply to Sh20.76 billion last year down from Sh28.88 billion in the previous year.
In contrast, long-term insurers increased their investments in government securities by 18.4 per cent to Sh474.22 billion up from Sh400.37 billion, and property investments by 11.9 per cent to Sh51.87 billion from Sh46.36 billion.
They also increased their investments in term deposits by 7.3 per cent to Sh22.36 billion from Sh20.84 billion and in unquoted shares by 93.9 per cent to Sh15.4 billion from Sh7.9 billion.
The long-term insurers also ramped up investments in their subsidiaries by 19.4 per cent from Sh6.56 billion to Sh7.83 billion.
“Total investments under long-term insurance business as at end of December 2022 amounted to Sh605.20 billion, an increase of 15.4 per cent compared to Sh524.35 billion reported as at end of Q4 2021,” said IRA.
General insurers – who control 54.5 per cent of Kenya’s total insurance premiums – also pulled their money out of NSE by cutting their investments in listed firms by 16.2 per cent during the period. This left insurers holding listed stock worth Sh4.8 billion down from Sh5.73 billion in the previous year.
In contrast, they increased their holding of government securities by 16 per cent to hit a value of Sh91.33 billion up from Sh78.71 billion, and investment in their subsidiaries by 13.5 per cent to Sh6.32 billion up from Sh5.57 billion.
They also raised their capital outlay in property by 0.5 per cent to Sh25.55 billion from Sh25.41 billion and in term deposits by one per cent from Sh21.25 billion up to Sh21.47 billion. “Total investments under general insurance business as at end of Q4 2022 amounted to Sh156.32 billion indicating an increase of 8.6 per cent from Sh143.88 billion reported in Q4 2021,” said IRA.
“Kenya government securities (treasury bills and bonds) and investment property accounted for highest proportions of total general insurers’ investments at 58.4 percent and 16.3 percent respectively,” the report said.
The NSE performed poorly in 2022 amid heightened global uncertainties which saw foreign investors pull Sh23.9 billion out of the bourse, the highest outflows in three years.
The NSE closed 2022 in bear territory as the all-share index (NASI) booked losses of 23.42 per cent to settle at 127.47 points.
Leading insurer Britam Holdings last year sold 253.1 million shares of Equity Group Holdings to the International Finance Corporation (IFC), for a reported consideration of Sh13.9 billion.
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