* Kenya's insurance to grow in 2009, but at a slower 10 pct
* Reinsurers to reconsider covering ships plying off Somalia
By Helen Nyambura-Mwaura
NAIROBI, April 30 (Reuters) - Kenya's insurance industry will see growth slow to approximately 10 percent in 2009 from 15 percent last year, because of slower economic growth, the head of a leading reinsurance company said on Thursday.
Eunice Mbogo, managing director of Kenya Reinsurance said her company's business would continue expanding this year because the firm has diversified into other markets. "There will be growth but not as much as we'd have expected had the economy grown faster. Individuals, particularly, will only insure when they have met basic needs," she said. Kenya Re, which insures other insurance firms, returned healthy profits in 2008. Pretax jumped 63 percent to 1.75 billion Kenyan shillings ($22.24 million).
"The beauty of diversifying geographically is that if Kenya is going through a hard time ... other parts of Africa may not. So when you look at the sum total, we should be OK."
Kenya Re covers more than 30 African nations, but two thirds of its business is in Kenya.
The insurance penetration level in east Africa's biggest economy is at a dismal 3 percent, she said.
Kenyan insurers are required to give 18 percent of the business they intend to reinsure to Kenya Re. Continental reinsurers Pan-African Africa Re and PTA Re also get similar compulsory cessions at 5 and 10 percent respectively.
Mbogo said most firms are reinsuring more than the required amount with Kenya Re. The cessions come to an end in 2011 but Mbogo said there was a case to be made for an extension.
LOOKING FOR BUYS
Mbogo said a regulatory requirement for insurance firms to raise minimum capital levels by 2010 heralds consolidation in the industry.
Life and non-life companies are expected to triple their capital to at least 150 and 300 million shillings respectively, from 50 million and 100 million presently.
One Nigerian company has already bought a Kenyan insurer and there were more -- both local and international -- sniffing around to buy some of Kenya's 43 insurance companies, she said.
Kenya Re is also looking to expand its operations in west Africa, especially in francophone countries. Currently, French-speaking underwriters handle that segment of business from Nairobi but the firm will open shop in Ivory Coast soon.
"In French-speaking countries, our penetration is not good enough and if we set up in the first year or two we would get over a 100 million shillings just by being there," Mbogo said adding that she would offer fire, marine and motor covers.
Mbogo said piracy off Somalia had not adversely affected the company. She had received a claim for only one hijacked ship whose owners had to pay a ransom.
An association of reinsurers could consider changing the region's rating or suspend covering cargo for a while, she said.
"If something is obviously going to be a claim, you don't want to be party to it," she said. "We should insure the unexpected. If for sure there are pirates there and they are waiting ... then it ceases to be insurable."
The company has also ceased insuring vessels and are instead covering only the cargo being shipped because many of the ships seeking insurance in Africa are not seaworthy.
"By the time they are coming to look for business in Kenya, perhaps their insurers there have said no because the ships are old, so the possibility of them sinking is higher," she said. (Editing by Rupert Winchester)