Liberty Kenya Holdings has warned of a sharp 25% drop in its 2025 profits, citing escalating medical claims and a tumultuous exit from the Tanzanian market as key factors behind the downturn.
The Strain of Medical Claims and Tanzania Exit
The Kenyan insurer’s financial struggles have become a significant concern, with projections for the 2025 earnings showing a stark decline from the previous year. Despite a strong performance in 2024, when profits hit Ksh 1.37 billion, Liberty Kenya is now bracing for a loss exceeding Ksh 300 million. The company’s efforts to sell its stake in Heritage Insurance Tanzania for Ksh 503 million, aimed at mitigating further losses, have done little to stem the bleeding, with the sale incurring an “accounting loss” that has only added to the pressure.
One of the primary challenges is the increasing costs of medical claims. As hospitals raise their charges, and fraudulent claims become more prevalent, the cost of coverage continues to soar. In addition, the national health crisis has intensified, with rising numbers of Kenyans requiring medical attention, further driving up insurer costs.
Meanwhile, Liberty’s motor book is also suffering. With spare parts costs surging due to a weakened shilling, the insurer is facing financial losses on even minor vehicle accidents, adding yet another layer of strain.
Investment Dilemma in a Hostile Market
Liberty Kenya’s woes are compounded by a hostile investment climate. Traditionally, insurers offset underwriting losses by making strategic investments. However, with fluctuating returns from government securities and a sluggish equities market, the company’s investment options have dwindled, offering no cushion against the ongoing losses.
CEO Kieran Godden remains optimistic, focusing on “resilience” and “digital transformation” as potential solutions. However, the mounting losses suggest a difficult road ahead for the insurer and the entire sector. The ripple effects are expected to be felt across the broader economy, with Kenyans likely to face higher premiums as insurers struggle to balance their books. For many, the era of affordable insurance may now be over, leaving only the most resilient players to survive in an increasingly unforgiving market.
