Jubilee; market leader trailing in profitability - myStocks: Opinion and Commentary

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Jubilee; market leader trailing in profitability

By Odhiambo Ramogi (Elim Consulting)
Comments Thursday, March 20, 2014 at 6:49 PM EAT


Jubilee holdings announced their full year results for 2013. Net profits grew by 9.56% to stand at KES 2.5 billion. Gross premium revenue stood at 18 billion compared to KES 15.4bn the previous year, a 16.9% growth. Results display a company in the right growth trajectory.

Claims and policy holders’ benefits grew by 28.2% to stand at 10.98 billion while the expenses and commissions grew at 14.3% to stand at KES 4.8 billion.

The company has proposed a final dividend of KES 6 per share making the total dividend to stand at KES 7 per share for the year. The Earning per share now stands at 38.

Given the amount of business the company enjoys and its standing in the market, the results are welcome but are below par for the market leader.

Risk Profile

Jubilee has its risks well spread across the region in Kenya, Uganda, Tanzania, Burundi, Mauritius and Pakistan. Insurance penetration globally is still low with North America leading at 11.03% followed by Europe at 6.73% and Asia at 5.73%. As such, the Pakistan outfit stands out as a real anchor for the Kenyan based insurer.

As any other insurance company, jubilee faces operational risks in all its outfits. Given the re-insurance framework, presence in many countries and a wide array of products, Jubilee is generally a low risk counter.

Market outlook

Jubilee remains the market leader in composite insurance Kenya with the largest premium revenue annually. Its market share stands at 11.3% (by 2012 results) with its closest rival CIC , following at 9.18%.

The company has presence in Mauritius which has an insurance penetration of 5.94% compared to Kenya’s 3.6%.

It has laid out plans to reach 12 other nations in Africa in 3 years time. The strategy might pay off if the countries are strategically selected in emerging economies of Africa.

Growth spectrum

The company is on a sure growth trajectory, giving positive results annually. It would seem the rebranding exercise three years ago paid off.

The plan to venture into 2 new African nations is notable and will bring new growth opportunities for the company in the long run. While it is trailing on the profitability end, it is still a good income generator and remains attractive to low risk investors.

Labels: CIC,   JUB


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