By DAVID HERBLING
Insurance claims from victims of the Westgate shopping mall terror attack cost African Trade Insurance (ATI) Sh128.5 million ($1.5 million), but the insurer still more than doubled its net profit for last year.
The pan-African reinsurer announced an after tax profit of $1.5 (Sh128.5 million) in the year ended December 2013 compared to $0.6 million (Sh51.3 million) a year earlier.
ATI attributed the performance to increased uptake of political risk cover and export credit insurance, which saw net premium earnings grow 50 per cent to $6 million (Sh514 million).
"There is increased awareness on political cover and the political instability in the region gives us business opportunities to underwrite political violence, terrorism and sabotage risks," said George Otieno, chief executive of ATI.
"We are targeting the massive energy and infrastructure projects in Kenya and the region which need risk mitigation against dangers such as payment default."
ATI said it received three claims from the Westgate Mall terror attack where it had reinsured a small portion of the $100 million total sum insured covering the building, loss of income and third party liabilities.
The 10-member country institution underwrote political and commercial risk covers in Kenya to the tune of Sh94.2 billion ($1.1 billion) last year, mostly to importers, commercial banks and infrastructure projects such as roads and the Olkaria IV geothermal plant.
Kenya’s shareholding in ATI has been diluted to 14.2 per cent from 16.5 per cent in 2012 and 17.4 per cent in 2011 following the entry of African Development Bank (AfDB) and Benin as equity holders.
Benin invested $7.2 million last year to become the latest member to join ATI after AfDB ploughed $15 million into the agency, which gives it an 8.5 per cent stake.
"Kenya’s shareholding has diluted due to entry of new partners. This will help diversify our risks, win more business and increase profitability," said Mr Otieno.
Kenya accounts for nearly half or 45 per cent of ATI’s business followed by Zambia, which makes up 30 per cent of total business.
Mr Otieno disclosed that ATI was currently in talks with the Economic Community of West African States (Ecowas) with plans to sign up Nigeria, Ghana, Sierra Leone, Liberia and Ivory Coast as new members.
The insurance firm says it has facilitated trade and investment opportunities worth $13 billion (Sh1.1 trillion) across Africa since inception in 2001.
ATI was designed to cover the trade and investment risks for companies doing business in Africa as a strategy to boost the confidence of investors coming to the continent.
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