AAR Insurance has released financial performance for the year 2020 that shows the company registered a Ksh. 234 million net profit.
This is a reduction from the previous financial year which stood at Ksh. 517 million in 2019. Profit before tax also declined from Ksh 756 million to Ksh 317 million in the same period.
The report indicated net earned premiums grew 19.7% to Ksh. 3.74 billion as total income also increased 14.6% to Ksh. 4.56 billion. However, gross written premiums, representing the company’s revenue, declined marginally by 3% from Ksh. 5.86 billion to Ksh. 5.68 billion.
Net claims and policyholders’ benefits rose 54.2% to Ksh. 2.59 billion from Ksh. 1.68 billion the previous financial year. The company paid out close to Ksh. 200 million in COVID-19 claims in 2020, signaling the harsh financial impact of the pandemic on health insurers.
AAR Insurance Kenya Managing Director, Nixon Shigoli, attributes the surge in claims to COVID-19 impact on business and families. “2020 was an extremely challenging financial year given the sudden shocks of the new coronavirus health crisis which significantly affected our bottom line given impact on many employers and families,” explained Shigoli.
Total assets grew by 4% to close the year at Ksh. 5 billion while shareholders’ funds increased to Ksh 1.3 billion from Ksh 1.1 billion in 2019. Management expenses ratio improved from 35% in 2019 to 30% in 2020 despite an increase in operating expenses by 3% due to costs incurred in cushioning staff and customers against the pandemic.
“Currently, 80 per cent of our staff are working from home. We have taken measures to ensure minimum disruption to our business while at the same time ensuring the health and safety of our customers.” Mr. Shigoli added.
Going forward, AAR Insurance is banking on accelerated digitization of its operations to improve efficiency and drive growth of its business. According to Shigoli, COVID-19 has amplified the importance of digital transformation in insurance. He added that the insurer has automated most of its services leading to improved efficiency, faster turnaround times and a better customer experience.
In addition to digital, AAR Insurance is also re-aligning its business to focus on product innovation and expansion into new, mainly under-served markets like Small and Medium Enterprises (SMEs) and micro-insurance.
AAR Insurance is among the leading medical insurers in East Africa, with over 200,000 customers in Kenya.