The boardroom at Liberty Kenya Holdings is facing a storm of red ink. The insurance giant has issued a grave profit warning, signaling that its earnings for 2025 will nosedive by at least 25%. It is a perfect storm of soaring medical claims, a disastrous exit from the Tanzanian market, and an investment environment that has turned hostile.

For the shareholders, this is a rude awakening. After a bullish 2024 that saw profits hit Ksh 1.37 billion, the projected drop strips away over a quarter of that value. The company is bleeding from multiple arteries. The decision to sell its stake in Heritage Insurance Tanzania for Ksh 503 million was meant to stop the bleeding, but the "accounting loss" booked from the sale has acted like a tourniquet that was applied too late.

The Medical Claims Timebomb

The underlying cancer eating away at Liberty's books—and indeed the entire Kenyan insurance sector—is the uncontrollable rise in medical claims. Hospitals are charging more, fraud is rampant, and Kenyans are getting sicker.

• Motor Mayhem: It is not just health; the motor book is burning. With the cost of spare parts skyrocketing due to the weak shilling, every fender bender is now a financial catastrophe for the insurer.
• The Investment Trap: Insurers usually survive underwriting losses by making smart investments. But with returns on government securities fluctuating and the equities market in a coma, the safety net has vanished.

A Sector on Life Support?

CEO Kieran Godden is putting a brave face on it, talking about "resilience" and "digital transformation." But the numbers don't lie. When a top-tier insurer sneezes, the whole economy catches a cold. This profit warning is a bellwether for a difficult 2026. If the big players cannot make money, premiums for the average Kenyan wananchi are about to shoot through the roof. The era of affordable cover is effectively over; now, it is about survival of the fittest in a market that is ruthlessly unforgiving.