Absa Life Assurance Kenya (Absa Life), a prominent and rapidly expanding life assurance company, has announced a substantial 85% surge in profit before tax, reaching KES 568.6 million for the fiscal year ending on December 31, 2022. This impressive growth was primarily driven by remarkable double-digit expansion across all key revenue streams. Notably, Absa Life’s strategic focus on digital transformation has resulted in surpassing the anticipated targets for gross written premium income and net earned premium. Gross written premium income witnessed a significant rise of 15% to KES 6.3 billion, up from KES 5.5 billion in the previous year. Consequently, net premium income saw an increase of KES 495 million or 13%, reaching KES 4.3 billion, and investment income soared by KES 255 million or 42% to KES 849 million.
Profit after tax increased by 70% to KES 416.6 million in 2022, a significant increase from KES 244.8 million recorded during the same period in 2021. The company ended the year with assets worth KES 9.3 billion, a 22% increase. Concurrently, Absa Life’s embedded value (which is a measure of the shareholder value in the company determined by the sum of net asset value and future profit present value) has increased to KES 1.2 billion, up from KES 974 million in 2021.
Absa Life’s Managing Director, Githanji Waiguru, said that the impressive financial performance is underpinned by consistent growth in key products, including the Endowment Plan, which was launched in April last year, driving significant business momentum in Q4. A sustained push in other existing products such as Absa Life’s flagship Education Plan and Group Risk Cover where the company has maintained market leadership further reinforced the performance.
“These results were achieved against the backdrop of a challenging operating environment characterized by macroeconomic, geopolitical, and social challenges that continued to have an impact on businesses at both the local and global stages. Some of the challenges included the impact of the long Covid-19 pandemic which continued to drive insurance claims and demand for the adoption of new ways of working and doing business. Additionally, the electioneering period, escalating inflation driven by fuel and food prices, and a volatile exchange rate environment all presented headwinds to business prospects,” Mr. Waiguru said.
On the expense side, transformational investments made during the year increased expenses by 13% as the company intensified product distribution and marketing efforts and enhanced customer value propositions to grow the top line. Apart from relaunching the company’s website, www.absalife.co.ke, where customers can view and interact with Absa Life’s products and services, other initiatives undertaken included the establishment of alternative distribution channels through collaboration with insure tech firms, as well as product distribution through independent agents.
“This year, we are advancing our innovation journey and elevating the customer experience with the launch of our digital sales portal, where customers will be able to access all of our services including quotation requests, lodging claims, policy amendments, and many more,” Mr. Waiguru explained.
“Looking ahead, our main focus is on technology and digital transformation, as well as more strategic partnerships to continue providing our products and services more conveniently to our customers,” he added.
Other highlights
Capital Adequacy
Our capital adequacy, which is our measure of strength, closed the year at 314% (from 322%, in FY 2021) because of an increase in the risk-based capital attributable to insurance and credit risk charges within our business. Absa Life remains in a strong solvency position capable of meeting all policyholder obligations.
Gross Written Premium (GWP)
The company recorded a significant increase in gross written premium of KES 6.3B or 15%, up from KES 5.5b the previous year. This was attributable to increased sales across all business lines.
CAGR (Compound Annual Growth Rate)
Over the past 5 years, Absa Life has had the highest industry CAGR at 33% in terms of Gross Written Premium, from KES 1.8B in 2018 to KES 6.3B as of December 2022.
Group Risk Market Leadership
Absa Life retained its no. 1 market leadership position in group risk business with a market share of 12.8% at KES 2.1b in GWP for 2022 (source: IRA Q4 2022 report). Through our Group Risk offering, we provide customizable solutions that enable employers to offer enhanced compensation packages that provide employees with a sense of security & protection through financial assistance in case of life’s unfortunate events.
Outlook
The key shift expected in the industry in 2023 is the implementation of the IFRS17, which will transform performance reporting, particularly the gross written premiums and the determination of profit or loss. We also remain cognizant of the macroeconomic conditions, particularly the high cost of living that has impacted the disposable incomes of policyholders. Absa Life will continue to focus on offering sustainable insurance products with high-value propositions that solve customer financial needs across various segments.