Insurers feel the pinch of downturn as people drop covers to stay afloat

According to Association of Kenya Insurers (AKI), the industry gross written premium for 2008 was Sh55.2 billion.

General insurance accounts for the largest portion of the underwriting business with Sh36.9 billion as premium while long term business account for Sh18.3 billion.

Mr Olende says the rising claims especially for general insurance is what is likely to keep insurance companies in the negative territory.

“The claims are going through the roof and they are being fuelled by rising cases of fraud and escalating cost of compensation.”

With the rising claims the players’ profitability has been eroded pushing them to the margins of survival.

The re-branding of AIG Insurance puts to rest speculation that the insurance business was to be sold off along side AIG Investment.

AIG Inc sold off AIG investment to Pacific Century Group a Hong Kong based private equity fund for $500 million (Sh39 billion).

In Kenya, Chartis Insurance will retain its two-thirds ownership of the local Chartis Kenya Insurance.

The other third is owned by Commercial Bank of Africa (CBA).

“The re-branding will not change anything for us nor affect our contractual obligation with our partners”, said Mr Olende but acknowledged they had to deal with the perception that the company was not stable.

AIG Inc was one of the global financial institutions bailed out by the US government last year to forestall collapse following the financial crisis.

Other financial institutions that were bailed out included Citi Bank Group, which also has a local unit.

Distinct entity

The re-branding to be undertaken across the 160 countries where it is present will see AIG Inc, the global conglomerate run its general insurance business as a separate unit from its other businesses.

“AIG General Insurance has been [carved out] as a distinct and separate entity from AIG Inc and it’s to operate as Chartis Insurance taking over all AIG Insurance business worldwide” said Mr Olende