Ericsson wrote:VituVingiSana wrote:Ericsson wrote:VituVingiSana wrote:Ericsson wrote:VituVingiSana wrote:Ericsson wrote:VituVingiSana wrote:Ericsson wrote:Ericsson wrote:https://youtu.be/fLgxkcD1Iz4
Operational challenges of 2021
-Slowdown in collecting premiums
-An increase in claims in certain lines of businesses.Certsin claims under policies which needs to be accommodated which resulted in claims costs going up.
Investment side;
-Slowdown in returns that they earn from investments such as bank deposits and other vehicles of investment.
-On the rental side of things,Kenya Re being a landlord.The market rates have had to go down.Things like escalation clauses on contracts have had to be removed or at least frozen for the time being.
A hit in the bottom line in terms of profitability.
Awful RoE.
Hope they subscribed/invested in the Family Bank bond and EABL Medium term note.
The two had attractive yields.
Better to have bought GoK's tax-free IFBs at 12.5% but those are very long. FB and EABL were shorter. They should have picked up Centum's too given it is only 3 years.
For centum one investors are becoming jittery about the company because of it's venture in real estate.
Centum has been in real estate for 10 years. And has done better than Kenya Re with its office buildings.
Kenya Re couldn't even sell the small building in Kisumu while Centum actively sold 1bn+ real estate since 2019. So it's not a stretch to say that Centum will be in a position to pay off its CRE bond in 2 years.
The two are incomparable.
Centum was selling in small pieces or tuplots to various buyers.
Kenya Re is selling the whole building to one buyer.The building is not small unless you have a definition of what small is.
The bond being undersubscribed while family bank and EABL are oversubscribed means investors have a confidence issue with Centum.
Who cares how Centum sells or what they sell. Haba na haba...
Kenya Re has failed to sell the Kisumu building for 1bn which is was valued at. I doubt they will get anything close to 1B.
The Centum bond was launched at a tough time in Dec 2020. No COVID vaccine.
EABL had "extended" its earlier bond and the new bond came out when there was more confidence with the vaccines out and being given to Kenyans. Same with Family Bank.
Even if covid vaccine was there that bond would still failed to get 100% subscription.
there is no harm in Kenya Re failing to sell the building but there is more harm in Centum failing to get buyers for its tuplots.
Now you are projecting bond subscription rates?
Centum will come through with real estate sales. 1H results are due. And then we wait for 2H. Riverbank is ready and units being handed over.
KenyaRe is losing money in reinsurance and surviving on interest income. Lousy dividends too.
NAV 11/- and dividend of 20c = Less than 2%.
Kenya Re's board needs to wisen up.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett