Guru, help me understand some of the metrics or logic you use to value an insurance company, also, are you a growth oriented or value oriented investor. If so, where do you find more appeal in the following stocks Pan African,jubilee or Kenya Re, and please rely on concrete facts for your thesis.

thanks alot, that said, i believe that of the three, Kenya Re is the best at creating shareholder value, in that it doesn't burn cash the way jubilee does(I stand to be corrected here.) But let me give you the metrics i use in valuing an insuarer, its simple, how much float does the company generate and what is its cost. Lets look at the two companies here. We are considering Jubilee and Kenya- re
Jubilee
Total net premiums received
7 yr period 19,917,282,000
5 year period 16,805,065,000
3yr period 12,134,951,000

Kenya Re Total net premiums received
7 yr period 17,707,963,058
5 year period 14,541,856,058
3yr period 9,541,475,058

Jubilee total Pretax returns
7 yr period 4,633,493,000
5 year period 3,961,447,000
3yr period 2,826,034,000

Kenya Re Pretax returns
7 yr period 7,151,494,027
5 year period 5,815,414,027
3yr period 4,206,634,027

Jubilee Pretax margins
7 yr period 23.26%
5 year period 23.57%
3yr period 23.29%

Kenya Re Pretax margins
7 yr period 40.39%
5 year period 39.99%
3yr period 44.09%

Source: respective Company reports


And this is before considering the balance sheet. What do you have to make of this. Clearly we see that Jubilee writes more business in terms of net premiums written than kenya re, but Kenya Re gets to retain a good portion of their net premiums every year and the longer term picture is way better. Look at that Pre-tax margin.44.09% and thats in the last 3 years ending 2009.
So my take is that the expansion is good but in terms of wealth creation, kenya re will continue dominating even after the mandatory seeding is removed. Clearly kenya Re generates way much more float than Jubilee and its cost is delicious!!

Sorry the numbers are kind of disorganised, i failed to copy the table here. But i believe you can still read and understand.

@msimon you stand to be corrected...

Kenya re cannot be compared on any basis to jubilee...

The management of Jubilee have made it the number one insurer in east africa while kenya re's management have been making disastrous investment decsions...

I would like you to do some research on the projects jubilee is involved in and the ones kenya re is involved in and you will know exactly which company is better..

Do you know the underwriting profitability of jubilee is unmatched while kenya re's is steadily declining...

Why invest in a useless company when there is a gem infront of your eyes

I finally figured a way of presenting my statistics. Well am not well versed with all the investments Jubilee has and i beg that you shade some light on this, but what i do know is that i can interpret financial statements and unless the managements have mastered ways of hiding earnings or inflating them, but from what the financials say, its a different picture. Ignore for a while the statements being said about where these two companies intend to invest and look at their long term performance over the years, it'll speak volumes. Then consider the things they said they would do in the past and have actually followed up on. That can help you judge the level of management. There's no doubt that of the two, jubilee has a better management in terms of quality, but in terms of wealth creation, its has been the opposite. Seriously!
Don't get me wrong, Jubilee has been profitable but look for yourself and judge of the two, who has created more float and generated a better return on that float. You know, all that Kenya Re needs is ultimate privatization, or a great CEO which am sure they are thinking of too. But in terms of wealth creation, NUMBERS DONT LIE!

@msimon dont be ignorant. Jubilee is a much better company compared to kre.if you invest in kre and i go for jubilee, i willbe driving a Ferrari in the next 10 yrs while you will be busy hiking a lift if you survive ulcers.pls check listed portfolio for each

@msimon - There is much more under the surface than the numbers.

Jubilee is a full-line insurer [even has a stake in an African Re-insurer] whereas KenyaRe is a Reinsurer with 'guaranteed' [by law] reinsurance business.
Now the latter [guaranteed biz] looks good does it not? Except... when they lose the guaranteed business [the monopoly which the others are fighting]... then what?

Jubilee has demonstrated EXCELLENT management & expansion into EAC & slowly Africa. Proven over the years. They are backed by the management depth of Aga Khan entities. Other AK firms in Kenya include Diamond Trust, Nation & TPSEA.

KenyaRe does not even have a CEO. Too much politics involved. Where is the ability to innovate or take risks lest you are blamed by GoK, shareholders, Board or public?

Look beyond the numbers too...
Finally, [IMHO] Jubilee is very conservative so the 'profits' are probably understated vs KenyaRe...

@msimon hope @vvs has answered you questions

@VVS please do inform monsieur @msimon that Jubilee Insurance does own a significant stake in all the above mentioned companies including K.P.L.C

While Kenya re is stuck with KCB shares it bought at 35bob and portland which they bought at whatever price..

The quality is in the management mon frere....

Please...let us not confuse what insurance and reinsurance is.I believe if we get to understand the core business of the two,we'll understand better on where to put our investment.Just a question...has anyone had there car insured or have their Domestic Package policy insured through Kenya-Re?

Jubilee Insurance is expanding to the rest of Africa because of competition and overcrowdness in the Kenyan market.
IRA should work at reducing the insurance companies to about 10 by rasing the paid up capital of insurance companies to ksh.1 Billion.
This will ensure Kenya has insurance companies which can compete,well known in both the African and international market.