Equity Group’s health insurance subsidiary made a profit in its first month of operation, riding on its parent’s brand and underlining the opportunity for the lender in the insurance sector.
Equity Health Insurance Kenya, which started operations last September, reported a pretax profit of Sh23 million, the bulk of which was from investment income.
The health unit posted Sh31 million in investment income over the month and incurred claims of Sh6.4 million.
‘The insurance sector is posting numbers that bankers only dream of. The health insurance was formed in September, and this one-month-old baby has made a profit of 23 million,’ said Equity Chief Executive James Mwangi.
‘That is the magic of Equity; you open a business and in a month it has broken even.’
Equity Group-which operates life, general and health insurance business- reported a 36.4 percent growth in pretax profit for its overall insurance business in the nine months to September to Sh1.46 billion, up from Sh1.07 billion a year earlier.
The general insurance, which started to operate at the beginning of the year, recorded a pretax profit of Sh140 million. The nine-month-old business had written premiums of Sh1.66 billion, generating insurance revenues of Sh1 billion. The life insurance business, which has been in existence since 2022, posted a pretax profit of Sh1.2 billion, up from Sh1 billion in a similar period a year earlier.
The life business has issued 17.8 million policies, the bulk of which are issued through digital platforms owned by the group.
Mr Mwangi said insurance had better prospects than the banking business due to opportunities afforded by low insurance penetration.
‘We predict that insurance will become a huge part of the group. The momentum of insurance is much bigger than the momentum of the banking group,’ he said.
Kenya’s insurance penetration is at 2.3 percent, with the low uptake of insurance attributed to mistrust towards the sector. Financial inclusion under the banking sector is currently 84.8 percent, meaning eight of every ten mature Kenyans are now banked.
Equity is banking on the reach of its brand to grow its insurance business and has turned its branch staff into agents to sell insurance products.
The bank disclosed that 2,395 staff took training on certificates of proficiency in insurance, underscoring the bank’s push to rely on existing resources to push the new business line.
‘What we expected to do is to disrupt and democratise insurance to drive inclusion,’ said Mr Mwangi.
Equity Group is a large player in the health industry with Equity Afia, its medical franchise, running 147 hospitals, which were visited by approximately 4.3 million patients last year.
Its interest in the Equity Afia hospitals, which are owned and managed by doctors who go through its education scholarship programme, provides the group with a pool of potential customers for health insurance.