Amaco Insurance has posted a decline in profitability, underscoring the growing strain within Kenya’s insurance sector even as premium volumes expand. The insurer, partly owned by William Ruto’s family through Yegen Farms Limited, reported a 15 percent drop in net profit to Sh86 million for the year ended December 2025, down from Sh102 million a year earlier.
Revenues rose to Sh3.82 billion from Sh3.22 billion, reflecting strong business growth. Yet that expansion was eclipsed by a surge in insurance claims, highlighting a structural challenge facing not only Amaco Insurance but the broader industry.
The result is a story that goes beyond a single company’s earnings. It is a window into the risks embedded in Kenya’s fast-growing but volatile insurance landscape, where aggressive expansion, especially in high-risk segments, can quickly erode profitability.
Growth built on risky terrain
Amaco Insurance’s recent trajectory has been defined by its aggressive push into the public service vehicle (PSV) insurance segment, particularly matatus. This strategy has delivered rapid gains in market share, positioning the insurer as a dominant player in a niche long shunned by more conservative underwriters.
The company now commands a significant portion of the PSV insurance market, at one point controlling nearly half of the segment’s premiums. This rise has been fueled by a willingness to underwrite a class of business widely viewed as difficult to price and prone to high claims.
That growth, however, has come at a cost. Claims rose by 39 percent in 2025, pushing total insurance expenses to Sh2.8 billion from Sh2 billion the previous year. The PSV segment alone generated Sh2.37 billion in claims, nearly matching the Sh2.55 billion in premiums collected from the same business line.
This imbalance reflects a long-standing concern within the insurance industry: that PSV premiums are often underpriced relative to the risks involved. High accident rates, fraud, and protracted legal disputes have historically made the segment unattractive to many insurers.
Amaco Insurance’s willingness to dominate this space has driven top-line growth but exposed it to precisely these pressures.
A broader industry pattern
The challenges facing Amaco Insurance are not unique. Across Kenya, insurers are grappling with rising claims, particularly in motor and medical insurance classes.
Industry data shows that the non-life insurance sector continues to expand, with total premiums growing steadily in recent years. However, profitability has not kept pace, as claims ratios climb and underwriting margins tighten.
Motor insurance, which includes PSV cover, remains one of the most problematic segments. It is characterized by high loss ratios, frequent litigation, and pricing inefficiencies. These dynamics are compounded by weak enforcement of traffic regulations and widespread fraud, both of which inflate claims costs.
In this context, Amaco Insurance’s experience reflects a structural tension within the industry: growth is often easiest to achieve in the riskiest segments, but sustaining profitability in those segments is far more difficult.
The political economy dimension
Amaco Insurance’s ownership structure adds another layer of complexity to its story. The insurer is partly owned by President William Ruto’s family, which holds approximately 15.8 percent of the company through Yegen Farms Limited.
This connection has drawn public attention, particularly as the company has expanded rapidly in a tightly regulated sector. While there is no evidence of wrongdoing, the overlap between political influence and commercial interests raises broader questions about governance, competition, and regulatory oversight.
Analysts note that in sectors like insurance—where licensing, pricing frameworks, and compliance requirements are tightly controlled—perceptions of political proximity can shape market dynamics. Competitors, investors, and policyholders alike often scrutinize such relationships closely.
At the same time, Amaco Insurance’s growth has also been aided by market disruptions unrelated to politics. The collapse or weakening of rival insurers in the PSV segment created opportunities that the company moved quickly to exploit.
Investment income cushions the blow
Despite the drop in net profit, Amaco Insurance’s financial performance was not uniformly weak. The company recorded a 50 percent increase in investment income, which rose to Sh193 million.
This boost was driven by holdings in government securities and property, which together accounted for a substantial portion of the insurer’s asset base. Such investments are a critical component of insurers’ business models, providing a buffer against underwriting volatility.
In Amaco’s case, investment income helped offset some of the losses incurred from rising claims. Without this cushion, the decline in profitability could have been even steeper.
However, reliance on investment income also highlights a key vulnerability. In a high-interest-rate environment, returns on government securities can support earnings. But if rates fall or asset values fluctuate, this support may weaken.
Market share battles intensify
The PSV insurance market has become increasingly competitive, with new entrants and established players vying for dominance. While Amaco Insurance has achieved significant gains, its market share has also shown signs of volatility amid intensifying competition.
Rivals have adopted aggressive pricing strategies and leveraged new capital injections to challenge incumbents. This has led to shifting market shares and heightened pressure on margins.
At the same time, the PSV segment remains highly concentrated. A handful of insurers control the vast majority of the market, leaving little room for smaller players.
This concentration amplifies systemic risk. If one major player faces financial distress due to high claims or pricing miscalculations, the effects could ripple across the entire segment.
The sustainability question
The central question emerging from Amaco Insurance’s results is whether its current growth model is sustainable.
On one hand, the company has demonstrated an ability to scale rapidly, capture market share, and generate strong revenue growth. Its dominance in the PSV segment positions it as a key player in a multi-billion-shilling market.
On the other hand, the underlying economics of that market remain challenging. High claims ratios, underpricing, and operational risks continue to erode profitability.
Industry experts have long warned that the PSV insurance model may require significant adjustments to become sustainable. These could include higher premiums, stricter underwriting standards, improved claims management, and stronger regulatory enforcement.
For Amaco Insurance, navigating this transition will be critical. The company must balance its growth ambitions with the need to maintain financial stability.
Governance and regulatory implications
The insurer’s performance also underscores the importance of robust regulatory oversight. Kenya’s insurance sector is regulated by the Insurance Regulatory Authority (IRA), which plays a key role in ensuring solvency, protecting policyholders, and maintaining market stability.
As insurers expand into high-risk segments, regulators face the challenge of balancing innovation and competition with prudential safeguards. This includes monitoring pricing practices, enforcing capital requirements, and addressing systemic risks.
For companies like Amaco Insurance, compliance and governance will be essential to sustaining investor confidence and avoiding reputational risks.
Outlook for Amaco Insurance
Looking ahead, Amaco Insurance’s trajectory will depend on its ability to adapt to a rapidly evolving market environment.
If the company can refine its underwriting practices, manage claims more effectively, and diversify its revenue streams, it may be able to restore profitability while maintaining its market position.
At the same time, broader industry reforms—such as improved pricing frameworks and enhanced fraud detection—could help stabilize the PSV segment and reduce volatility.
For now, the insurer’s 2025 results serve as a cautionary tale. Rapid growth, while impressive, does not guarantee sustainable profits—especially in a sector where risk is both pervasive and difficult to quantify.
A pivotal moment for Amaco Insurance
The decline in profits at Amaco Insurance marks a pivotal moment not only for the company but for Kenya’s insurance industry as a whole.
It highlights the delicate balance between growth and risk, the challenges of operating in high-risk segments, and the importance of strong governance and regulatory oversight.
As the industry continues to evolve, the experience of Amaco Insurance will offer valuable lessons for insurers, regulators, and investors alike. Whether the company can turn its growth into sustainable profitability remains an open question—but one that will shape the future of the sector in the years to come.
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