Jul 13, 2025

Following the release of the FY’2024 results by Kenyan insurance firms, the Cytonn Financial Services Research Team undertook an analysis on the financial performance of the listed insurance companies and the key factors that drove the performance of the sector. In this report, we assess the main trends in the sector, and areas that will be crucial for growth and stability going forward, seeking to give a view on which insurance firms are the most attractive and stable for investment. As a result, we shall address the following:

1. Insurance Penetration in Kenya,
2. Key Themes that Shaped the Insurance Sector in FY’2024,
3. Interest rates
4. Industry Highlights and Challenges,
5. Performance of The Listed Insurance Sector in FY’2024, and,
6. Conclusion & Outlook of the Insurance Sector.

Section I: Insurance Penetration in Kenya

Insurance uptake in Kenya remains low compared to other key economies with the insurance penetration coming in at 2.4% as at FY’2024, according to Q4’2024 Insurance Regulatory Authority (IRA).  The low penetration rate, which is below the global average of 7.0%, according to Swiss RE institute, is attributable to the fact that insurance uptake is still seen as a luxury and mostly taken when it is necessary or a regulatory requirement. Notably, Insurance penetration remained relatively unchanged from 2.4% recorded in 2023, showcasing the mild economic recovery that saw a slight improved business environment in the country. The chart below shows Kenya’s insurance penetration for the last 14 years:

Source: Cytonn Research

The chart below shows the insurance penetration in other economies across Africa:

*Data as of 2023

Source: Atlas Magazine

Insurance penetration in Africa has remained relatively low, averaging 3.5% in 2024, mainly attributable to lower disposable income in the continent and slow growth of alternative distribution channels such as mobile phones to ensure wider reach of insurance products to the masses. South Africa remains the leader in insurance penetration in the continent, owing to a mature and highly competitive market, coupled with strong institutions and a sound regulatory environment.

Section II:  Key Themes that Shaped the Insurance Sector in FY’2024

In FY’2024, the country experienced a more favourable operating environment due to declining inflation and a stronger Shilling. Notably, the inflation rate in FY’2024 averaged 4.5%, 3.2% points lower than the 7.7% average in FY’2023, with the Kenyan Shilling having appreciated by 17.4% against the USD in FY’2024. As such, according to the  Q4’2024 Insurance Regulatory Authority Insurance industry report, the insurance sector showcased resilience recording a 9.4% growth in gross premium to Kshs 395.3 bn in FY’2024, from Kshs 361.4 bn in FY’2023. Insurance claims also increased by 12.5% to Kshs 105.7 bn in FY’2024, from Kshs 94.0 bn in FY’2023. On the other hand, the overall GDP growth rate declined to 4.7% in FY’2024, from 5.7% recorded in a similar period last year according to 2025 Economic Survey Report.

Notably, the general insurance business contributed 51.6% of the industry’s premium income in FY’2024 compared to 48.4% contribution by long term insurance business in the same period. During the period, the long-term business premiums increased by 12.5% to Kshs 191.2 bn, from Kshs 170.0 bn in 2023 while the general business premiums grew by 6.7% to Kshs 204.1bn, from Kshs 191.3 bn in 2023.  Additionally, motor insurance and medical insurance classes of insurance accounted for 64.8% of the gross premium income under the general insurance business, compared to 63.5% recorded in 2023. As for long-term insurance business, the major contributors to gross premiums were deposit administration and life assurance classes accounting for 57.5% in FY’2024, compared to the 59.8% contribution by the two classes in FY’2023.

Key highlights from the industry performance:

1. The sector’s investments income increased by 61.3% to Kshs 132.1 bn in 2024, from Kshs 81.9 bn in 2023, mainly attributable to the 86.4% increase in the investment income in the long-term to Kshs 106.8 bn, from Kshs 57.3 bn in 2023, coupled with the 2.9% increase in investment income in the general insurance business to Kshs 25.3bn, from Kshs 24.6 bn in 2023,
2. Continued recovery from the ripple effects of the pandemic witnessed in 2020 that saw both individuals and businesses seek insurance uptake to cover for their activities, leading to growth in gross premiums which increased by 9.4% to Kshs 395.3 bn in 2024, from Kshs 361.4 bn in 2023,
3. Enhanced convenience and operational efficiency driven by the use of alternative distribution and premium collection channels, including Bancassurance and strengthened agency networks, and,
4. Technological advancements and innovation have enabled premium payments to be made easily via mobile phones.

On valuations, listed insurance companies are trading at a price to book (P/Bv) of 0.6x, lower than listed banks at 0.9x, but both are lower than their 16-year historical averages of 1.3x and 1.7x, for the insurance and banking sectors respectively. These two sectors are attractive for long-term investors supported by the strong economic fundamentals. The chart below shows the price to book comparison for Listed Banking and Insurance Sectors:

Source: Cytonn Research

The key themes that have continued to drive the insurance sector include:

1. Technology and Innovation

Although the insurance industry was initially slow to embrace digital trends, the outbreak of the COVID-19 pandemic in 2020 made digital distribution of insurance products a necessity. As a result, most insurers have since leveraged digital platforms to boost growth and enhance insurance penetration across the country.In April 2024, CIC Group announced the launch of Easy Bima, a digital motor insurance product. This solution enables customers to spread the cost of their comprehensive motor insurance premiums into equal monthly instalments over a 12-month period, offering greater flexibility and affordability. By utilizing digital platforms, it enhances accessibility to insurance, particularly for individuals who find it challenging to make lump-sum payments. Consumers often term insurance as difficult and complex to understand. This sentiment has been established through various studies carried out to establish reasons for low uptake of insurance, the latest being the 2024 Fin Access Survey. The survey found that 63.2% of the respondents do not afford premiums while 19.4% lacks awareness of the products. Additionally in February 2025, Jubilee insurance launched J-Force a digital solution aimed at improving efficiency in insurance distribution by simplifying policy administration, client interaction, and transaction handling. In addition to providing real-time business analytics, J-Force empowers intermediaries to work faster and more accurately facilitating client onboarding, lead management, policy issuance, and renewal tracking in a smooth, fully digital environment.

2. Regulation

To position the sector within a globally competitive financial services landscape, the regulator has been actively implementing regulations aimed at tackling both longstanding and emerging challenges. The COVID-19 environment proved challenging especially on the regulatory front, as it was a balance between remaining prudent as an underwriter and adhering to the set regulations given the negative effects of the pandemic. Regulations used for the insurance sector in Kenya include the Insurance Act Cap 487 and its accompanying schedule and regulations, Retirement Benefits Act Cap 197 and The Companies Act. In FY’2024, regulation remained a key aspect affecting the insurance sector and the key themes in the regulatory environment include;

1. IFRS 17- IFRS 9, Financial Instruments was replaced with IFRS 17. The standard establishes the principle for recognition, measurement, presentation and disclosure of insurance contracts with the objective of ensuring insurance companies provide relevant information that faithfully represents the contracts. However, as a way to protect the insurance industry from the negative effects of the pandemic the International Accounting Standards Board (IASB), the international body responsible for setting up financial reporting standards deferred its implementation effective from January 2023 or earlier. The standard, having replaced IFRS 4, is expected to give better information on profitability by providing more insights about current and future profitability of insurance contracts. Separation of financial and insurance results in the income statement will allow for better analysis of core performance for the entities and allow for better comparability of insurance companies, and,
2. Risk Based Supervision - IRA has been implementing risk-based supervision through guidelines that require insurers to maintain a capital adequacy ratio of at least 200.0% of the minimum capital. The regulation requires insurers to monitor the capital adequacy and solvency margins on a quarterly basis, with the main objective being to safeguard the insurer’s ability to continue as a going concern and provide shareholders with adequate returns. We expect more mergers within the industry as smaller companies struggle to meet the minimum capital adequacy ratios. We also expect insurance companies to adopt prudential practices in managing and taking on risk and reduction of premium undercutting in the industry as insurers will now have to price risk appropriately.

3. Capital Raising and share purchase

The move to a risk-based capital adequacy framework presented opportunities for capital raising initiatives mostly by the small players in the sector to shore up their capital and meet compliance measures. With the new capital adequacy assessment framework, capital is likely to be critical to ensuring stability and solvency of the sector to ensure the businesses are a going concern. According to the updated Insurance act 2022,General insurers are required to have at least KES 600 mn while life insurance providers are required to have KES 400 mn in minimum capital. In May 2022, Sanlam Limited, a South African financial services group listed on the Johannesburg Stock Exchange, announced that it had entered into a definitive Joint Venture agreement for a term of 10 years with Allianz SE, with the aim to leverage on the two entities footprints in Africa and create a leading Pan-African financial services group, with an estimated equity value of Kshs 243.7 bn. Key to note, Sanlam Limited, indirectly owns 100.0% in Hubris Holdings Limited, which is the majority shareholder in Sanlam Kenya Plc, a listed insurance and financial services entity on the Nairobi Stock Exchange. The initial shareholding split of the Joint Venture was announced to be 60:40, Sanlam Limited to Allianz respectively, with the effective date of the proposed transaction being within 12-15 months of the announcement, subject to relevant approvals. However, given the length of the Agreement we expect that the Joint Venture will provide for Sanlam Kenya Plc, Allianz General Insurance Kenya and Jubilee General Insurance (which Allianz owns the majority stake in – 66.0%), to combine operations to grow their market share, asset base and bottom lines.

Additionally, insurance companies have increasingly turned to capital raising initiatives such as rights issues to strengthen their financial positions. A recent example is Sanlam Kenya, which undertook a rights issue offering 500.0 million new shares at an offer price of Kshs 5.00 per share. The capital raised is to be directed towards key strategic areas, primarily aimed at reducing the Group’s long-term debt exposure and supporting its return to profitability.

Section III: Interest rates

The higher interest rate environment in 2024 translated into significantly enhanced returns for insurers with investments on government securities. With Central Bank rates elevated at the for most part of 2024, insurers capitalized on higher-yielding treasury bills and bonds, with 364-day T-bill,182-day T-bill and 91-day T-bill giving average return of 16.0%,15.7% and 15.2% respectively in 2024, compared to 12.8%,12.4% and 12.2% returns for 364-day T-bill,182-day T-bill and 91-day T-bill respectively in 2023. According to IRA report, Investments in income-generating assets registered growth, increasing by 16.6% to Kshs 1.09 tn in Q4’2024, up from Kshs 938.4 bn recorded in Q4’2023, with government securities growing by 19.1% to Kshs 777.4 bn in Q4’2024,up from Kshs 652.6 bn in Q4’2023. Insurers rebalanced their portfolios to seize the higher yields available in government instruments. The share of government securities rose 1.6% points year-on-year to 71.1% in Q4’2024 from 69.5% in Q4’2023, attributable to increased returns from government securities. The chart below shows comparison of investments portfolio allocations for the industry:

Source: IRA

Section IV: Industry Highlights and Challenges

The insurance sector has recorded consistent growth over the past ten years, and this trend is expected to continue at a moderate pace, supported by an improving economic outlook and a corresponding increase in insurance premiums, factors which are likely to enhance the industry's capacity to maintain profitability.

On the regulatory front, the rejected Finance Bill 2024 included provisions that sought to expand taxes on insurance premiums and extend VAT to certain insurance services. These included a new 2.5% tax on the value of motor vehicles, payable when issuing insurance cover and limiting VAT exemptions to insurance and reinsurance premiums only, subjecting other related services to the standard VAT rate of 16.0%. These measures were aimed at increasing government revenue but were met with opposition from industry stakeholders, including the Association of Kenya Insurers (AKI) due to concerns over increased insurance costs. The rejection of the Finance Bill has provided a temporary reprieve for the insurance sector, though discussions on balancing fiscal policy and market growth continue to shape the regulatory landscape.

 

Industry Challenges:

• Insolvency: A major challenge facing the insurance industry is the financial instability and insolvency of key players, as evidenced by recent cases in 2024 like Resolution Insurance and United Insurance Company. These companies have been placed under statutory management and provisional liquidation by the Insurance Regulatory Authority (IRA) and through court orders. The issues arise from extended financial struggles, internal boardroom disputes, and declining market share, especially in unprofitable areas such as Public Service Vehicle (PSV) insurance. The collapse of these insurers undermines customer trust, destabilizes the industry, and compels policyholders to find alternative coverage. To regain stability and rebuild consumer confidence, the sector must tackle issues related to governance, risk management, and liquidity,
• Insurance fraud: Insurance Fraud is an intentional deceit performed by an applicant or policyholder for financial advantage. In recent years, there has been an upsurge in fraudulent claims, particularly in medical and motor insurance, with estimates indicating that one in every five medical claims are fraudulent. This is mainly through exaggerating medical costs and hospitals by making patients undergo unnecessary tests. Fraudsters also collude with hospitals to file false claims, including fabricated surgeries and treatments, while some healthcare providers inflate charges for insured patients. To curb these challenges, the industry has adopted implementing blockchain technology and artificial intelligence to detect and prevent fraud. In 2024, the number of fraud cases reported to the Insurance Fraud Investigation Unit (IFIU) decreased by 15.6% to 184 cases, from 218 cases reported in 2023,
• High Market competition: Despite low insurance penetration in the country, the sector is served by 57 insurance companies offering the same products. The sector is increasingly facing competition from banking institutions and telecommunications companies, which pose a growing threat to its market share. New players like Safaricom, which was recently licensed by the Insurance Regulatory Authority (IRA) as an insurance broker, along with Equity Group’s ongoing expansion into the insurance space through the launch of Equity life Assurance, are intensifying competition for traditional insurers,although increasing the availability of insurance services in the country. Some insurers have resorted to shady tactics in the fight for market dominance, such as premium undercutting, which is involves offering clients implausibly low premiums in order to gain competitive advantage and protect their market share. This is a significant factor in the industry's underwriting losses. Plans to hire a consultant to review industry pricing in March 2021 were retaliated against by the regulator, but the plans are still in the works. However, this is against a background of weak insurance uptake, which could be made worse by higher premium prices. Industry participants have debated pricing, 
• Declining consumer confidence in the insurance industry: In 2024, IRA received 1,842 complaints from policyholders and beneficiaries lodged against insurers. The general insurance accounting for majority of the complaints at 76.3%, while long-term insurers recording 23.7%. The complaints range from insurance companies failing to settle claims and constant haggling over terms of insurance. Such experiences have led to skepticism toward insurers thus leading to declined consumer confidence, and,
• Regulation compliance: Due constant updates on the laws governing insurance sector, such as capital requirements, smaller insurance businesses and new market entrants have found it challenging to operate without raising capital or combining to expand their capital base. Additionally, the implementation of IFRS 17, are expensive since accounting and actuarial systems need to be updated and realigned. There is lack of adequate skilled professionals due to the complexity of IFRS 17 which requires a solid grasp of both accounting and actuarial concepts. This skills gap has resulted in difficulties in fully understanding and applying the requirements of the framework.

Section V: Performance of the Listed Insurance Sector in FY’2024

The table below highlights the performance of the listed insurance sector, showing the performance using several metrics, and the key take-outs of the performance.

Listed Insurance Companies FY’2024 Earnings and Growth Metrics
Insurance	Core EPS Growth	Insurance revenue growth	Claims growth	Loss Ratio	Expense Ratio	Combined Ratio	ROaE	ROaA
Sanlam	695.5%	6.1%	2.6%	77.1%	40.1%	117.2%	75.7%	2.8%
Liberty	112.3%	(2.3%)	44.0%	77.9%	55.8%	133.7%	13.7%	3.0%
Jubilee Insurance	85.7%	13.5%	2.6%	94.3%	29.8%	124.2%	9.2%	2.2%
Britam	53.5%	3.1%	24.3%	72.7%	32.0%	104.7%	18.3%	2.6%
CIC	82.5%	3.7%	7.2%	92.0%	25.6%	117.5%	25.9%	4.6%
*FY'2024 Weighted Average	126.7%	8.4%	23.5%	83.2%	47.2%	130.4%	24.9%	4.1%
**FY'2023 Weighted Average	116.0%	21.3%	31.8%	82.3%	100.3%	182.6%	10.5%	1.7%
*Market cap weighted as at 11/07/2025
**Market cap weighted as at 21/06/2024

The key take-outs from the above table include;

1. Core EPS growth recorded a weighted growth of 126.7%, higher compared to the weighted growth of 116.0%, in FY’2023. The sustained growth in earnings was attributable to increased premiums during the period following continued recovery by the sector from the impacts of the COVID-19 pandemic, coupled with higher yields from government papers at the beginning of the period,
2. Insurance revenue grew at a slower pace of 8.4% in FY’2024, compared to a growth of 21.3% in FY’2023, while claims also grew at a slower rate of 23.5% in FY’2024, from the 31.8% growth recorded in FY’2023 on a weighted average basis,
3. The loss ratio across the sector increased to 83.2% in FY’2024 from 82.3% in FY’2023,
4. The expense ratio reduced significantly to 47.2% in FY’2024, from 100.3% in FY’2023, owing to decreased in operating expenses, a sign of increased efficiency,
5. The insurance core business still remains unprofitable, with a combined ratio of 130.5% as at FY’2024, lower than the 182.6% in FY’2023, and,
6. On average, the insurance sector delivered a Return on Average Equity (ROaE) of 24.9%, an increase from a weighted Return on Average Equity of 10.5% in FY’2023.

Based on the Cytonn FY’2024 Insurance Report, we ranked insurance firms from a franchise value and from a future growth opportunity perspective with the former getting a weight of 40.0% and the latter a weight of 60.0%.

For the franchise value ranking, we included the earnings and growth metrics as well as the operating metrics shown in the table below in order to carry out a comprehensive review:

Listed Insurance Companies FY’2024 Franchise Value Score
Insurance Co.	Loss Ratio	Expense Ratio	Combined Ratio	Tangible Common Ratio	Franchise Value Score	Ranking
Sanlam	77.1%	40.1%	117.2%	4.5%	14	1
Britam	72.7%	32.0%	104.7%	14.0%	15	2
CIC	92.0%	25.6%	117.5%	17.5%	15	3
Jubilee Insurance	94.3%	29.8%	124.2%	22.9%	21	4
Liberty	77.9%	55.8%	133.7%	19.7%	25	5
*FY'2024 Weighted Average	83.2%	47.2%	130.4%	17.8%

The Intrinsic Valuation is computed through a combination of valuation techniques, with a weighting of 40.0% on Discounted Cash-flow Methods, 35.0% on Residual Income and 25.0% on Relative Valuation. The overall FY’2024 ranking is as shown in the table below:

Listed Insurance Companies FY’2024 Comprehensive Ranking
Bank	Franchise Value Score	Intrinsic Value Score	Weighted Score	FY’2024 Ranking	FY’2023 Ranking
Sanlam Kenya	1	1	1.0	1	1
CIC Group	3	2	2.4	2	4
Britam Holdings	2	5	3.8	3	5
Liberty Holdings	5	3	3.8	4	3
Jubilee Holdings	4	4	4.0	5	2

Major Changes from the FY’2024 Ranking are;

1. Sanlam Kenya maintained position 1 in FY’2024 driven by strong intrinsic and franchise score, attributable to the sharp increase in core earnings per share growth to a growth of 695.5%, from a decline of 87.9%,
2. CIC Group improved to position 2 in FY’2024 driven by improved franchise score, attributable to the decrease in the claims growth to 7.2%, from a 17.8% growth recorded in FY’2023.
3. Liberty Holdings declined to position 4 in FY’2024 mainly due to weakened franchise score in FY’2024, driven by an increase in claims ratio to 44.0% in FY’2024, from 42.0% recorded in FY’2023,
4. Britam Holdings improved to position 3 in FY’2024, mainly due to increase in franchise scores in FY’2024, driven by the decrease in claims growth to 24.3%, from the 55.1% growth recorded in FY’2023, and,

Section VI: Conclusion & Outlook of the Insurance Sector

Recent improvements in Kenya's economy have set the stage for a more optimistic outlook for the insurance industry. As inflation eases and the Kenyan Shilling stabilizes, households are likely to enjoy increased disposable income, potentially driving higher insurance uptake. Despite ongoing challenges, the sector is benefiting from accelerated digital transformation and innovation trends that gained momentum during the pandemic. Regulatory improvements and customer-centric approaches remain key areas of focus. The more favourable economic environment offers insurers a solid foundation for growth, with opportunities to refine product offerings, strengthen customer relationships, and develop policies that reflect the evolving financial needs and capabilities of consumers.

The insurance sector should build on the following strategies to sustain growth and capitalize on the economic upturn:

1. Regulations - To ensure the sector's solvency and sustainability, we anticipate more regulation from the regulatory body and other international stakeholders. Insurers must modify their insurance contract recognition techniques in advance of the implementation of IFRS 17.  The regulator's quest for the targeted capital adequacy levels will almost certainly result in further consolidations as insurers struggle to achieve the capital requirements, particularly for small firms. Furthermore, regulators, governments, and policymakers are working harder to make Environmental, Social, and Governance (ESG) standards a requirement in the insurance industry,
2. Partnerships and alternative distribution channels-We expect underwriters to keep forming strategic partnerships and expanding their distribution channels in the future. This can be accomplished by collaborating with other financial service providers such as fund managers who have ventured into offering insurance-related products alongside existing bancassurance arrangements with banks. Additionally, insurers can leverage the penetration of banking products to increase awareness and uptake of their own offerings.For instance, in July 2024, NCBA Group announced the completion of 100% acquisition of AIG Kenya Insurance Company (AIG Kenya). This move allows NCBA to leverage its physical and digital platforms to boost insurance penetration in Kenya and the wider East African region. This acquisition aligns with the broader trend of partnerships and alternative distribution channels, as NCBA’s collaboration with AIG Kenya demonstrates how banks and insurance providers can work together to broaden access to insurance products. According to AKI released state of the Bancassurance Market in Kenya 2024 report, Bancassurance distribution channel market share grew to 10.0%  with the channels gross written premium growing to Kshs 35.0 bn in 2023,
3. Regional Diversification - As insurers look to expand their portfolios and mitigate risks, entering new markets can provide growth opportunities and help spread exposure across multiple economies. This strategy allows companies to tap into underpenetrated regions, improving overall revenue streams and reducing dependence on local markets. By entering emerging and underserved markets, insurers can gain access to new customer bases, diversify their product offerings, and strengthen their positions across Africa and beyond. For instance, in June 2024, Britam announced its plans to expand into the Democratic Republic of Congo (DRC) as part of its five-year strategy to grow regionally. This expansion builds on its success in international markets, which contributed 29.0% of its total insurance revenue in 2023. With strong performance driving a 65.0% increase in profit before tax, Britam continues to focus on growth and customer-centric transformation,
4. Technology and Innovation: To aid portfolio expansion and growth, insurers must harness the digital insurance solutions at their disposal in order to improve internal efficiency and accelerate time to market. As such, we anticipate cooperation between insurers and InsurTechs. For instance, in February 2024, Britam launched BetaLab a new insurance innovation hub, as it aims to nurture budding InsurTech and fintech start-ups, and fast track product development in the industry. The lab’s mission is to incubate, innovate, and accelerate start-ups, nurturing and empowering innovation among internal staff, while also exploring innovation opportunities with insuretechs and fintechs. Additionally, insurers should embrace use of artificial intelligence to improve efficiency by integrating Artificial Intelligence (AI) into underwriting, automating claims processes, and using chatbots for customer support, thereby streamlining overall operations. For instance, in April 2024, M-tiba announce the successful integration of AI into their claims processing system, leading to significant reductions in claims approval process to just hours. Additionally, use of AI enhances their efficiency and fraud management resulting in low administrative and healthcare costs for health insurers,
5. Insurance awareness campaigns – Low insurance penetration is significantly impacted by the persistent information gap about insurance products and their significance. Insurance is still largely assumed to be regulatory compliance rather than a necessity. The regulators, insurers, and other stakeholders should enhance insurance awareness campaigns to increase understanding of insurance products. According to Finaccess survey 2024, the second largest contributor to low insurance uptake at 19.4% is a lack of awareness of the various insurance products and their benefits. As such, there is a lot of headroom for insurers to educate, repackage, and tailor their products to different potential clients, and,
6. Investment diversification – To enhance profitability and minimize losses, underwriters should prioritize diversifying their investments through avenues like pension schemes, unit trusts, fund management, and investment advisory services. The combined ratios declined to 130.4% in FY’2024 from 182.6% in FY’2023 pointing toward losses in insurers' core operations, although an improvement, as rising underwriting costs and claims have outpaced premium growth. In addition, we anticipate insurers will continue to investigate non-traditional asset types such as infrastructure.

Disclaimer: The views expressed in this publication are those of the writers where particulars are not warranted. This publication is meant for general information only and is not a warranty, representation, advice or solicitation of any nature. Readers are advised in all circumstances to seek the advice of a registered investment advisor.