Has anyone looked into Kenya Re's change in accounting policies with regard to earnings per share. I noticed earnings per share is 1.40 for September 2009 and was 1.97 for 31 December 2008. I realized that they were only recognising profits from general business. EPS is usually calculated from PAT. I hear the new accounting standards disregard profits from long term (life) business because it will be paid out at some future date. So earnings per share should comprise profits attributable to short term (general) business,while life profits simply add to reserves.

Has anyone heard of this? And does it make sense? Have composite insurers like Jubilee Holdings adopted this new standard? (u don't have to answer those questions btw) Kenya Re's annual report doesn't mention adoption of new accounting standards,so if anyone has a clue as to which IFRS standard it,I'd appreciate it.

Profits attributed to Life business comprised 25% of profits in 2007,20% in 2008 and 20% as at Sep 2009; so I think it (the 'IFRS' standard) creates some problems for valuation,forecasting and dividends. P/E appears higher than it should be,one can't forecast dividend policy accurately and are profits from life business really distributable (to shareholders) if they 'belong' to policyholders?

Appreciate any thoughts.


The process by which banks create money is so simple that the mind is repelled.

@ jerry. Pan African was probably a typo by the NSE. I don't see how it could have dropped so far in one day. And on the Kenya Re thing,I'm not an accountant so I found the whole rationale about the EPS thing confusing. Because there's no reason for the EPS to be based on general business profit. What implication does this have on Pan African Insurance that deals with life business only?

The process by which banks create money is so simple that the mind is repelled.

@hi-lo. nimesoma kitu. Then it means that since the life business is healthy (from reported profits) then we are assured that the 19.65% increase in EPS to 1.40 is safe. In other words the healthy life business is a 'disclosure' that reassures the shareholder. Is Pan Africa dominated by life business and is it the reason that it rarely pays dividends? Just thinking around!

Crocodile tears: If you can't assist me when I'm alive en you attend my funeral.

@scub...the thread you've dug out is not the right one...there is/was another longer one with more dynamic arguments from an accountant and specifically on the matter you've raised...keep digging...

...on the life funds profits,I guess KNRE has contracted a lazy/conservative actuary who doesn't do valuations in time and/or refuses to transfer larger chunks to shareholders... as opposed to Jubilee and Panafrica actuaries who are quite liberal or inhouse...

Playing the stock market without insider info...is like buying a cow in the moonlight.