Britam overtakes Jubilee to become top life insurer

Britam is the largest life insurer in the country after overtaking Jubilee Insurance in the first quarter of the year, according to the latest data by the Insurance Regulatory Authority (IRA).

Britam increased its market share to 18.7 per cent in March from 17.9 per cent in December last year, rising over Jubilee whose control shrunk to 15.1 per cent from 19.6 per cent at the close of the year.

“It is because of our distribution network in terms of branches. We have 46 and over 2,500 financial advisors,” said Britam’s director of marketing and corporate affairs Muthoga Ngera.

Britam collected life insurance premiums worth Sh2.98 billion in the three months to March compared to Jubilee’s Sh2.4 billion. Life insurance premiums increased by 20.4 per cent in the first quarter to Sh15.98 per cent compared to a similar period last year.

The growth has been attributed to a rising middle class hungry for social security.

Jubilee remained at the helm of the general insurance business after increasing its market share to 12.8 per cent from 10 per cent in December. This leaves Jubilee as the largest insurer when general and life businesses are combined. Britam’s market share in the general insurance business stands at 4.58 per cent.

Mr Ngera said the company had acquired satellite branches and was working with independent agencies to drive its general business.

The two companies have however posted contrasting performance on the Nairobi Securities Exchange with Britam on the losing side.

At 2.30pm Monday, Britam was trading at Sh16.10 per share down 26.8 per cent compared to the price a year ago while Jubilee has gained 42.9 per cent to Sh560 per unit over the same period.

ICEA Lion, associated with the family of a former Central Bank of Kenya governor Philip Ndegwa, was ranked third in the life business section with a market share of 13.2 per cent, a gain from last December’s 11.6 per cent.

Pan Africa Life has the fourth largest market share of 8.7 per cent above CIC Life, which controls 8.2 per cent of the life business in the country.

The Kenyan insurance sector has witnessed a flurry of corporate activities including mergers and acquisitions underlining investor appetite for the industry.

A growing middle class and the nascent oil, gas and mining sector are the main factors expected to drive the industry going into the future.

Insurance penetration, especially life cover, is low in Kenya. Total premiums for both general and life cover is estimated at below four per cent indicating high growth potential.

Some of the recent mergers and acquisitions involved underwriters UAP, Pan Africa, Gateway, Britam, Real, Resolution, AAR, Apollo, Kenya Re, ATI and Swiss Re, as well as institutional investors LeapFrog, African Development Corporation and Afrocentric.

READ: Insurance investors reap Sh10bn from takeovers

Financial strength
The Treasury has proposed to raise capital requirements for insurers. Investors are also looking at mergers and equity sales to boost their financial strength in the wake of higher capital requirements.

New regulations published by Treasury secretary Henry Rotich will require insurers to more than double their capital levels by June 2018.

General underwriters will, for instance, be required to raise their capitalisation from Sh300 million to Sh600 million.

Life insurers will be required to have Sh400 million, up from the current Sh150 million, while those in the life reinsurance business will see their capitalisation jump to Sh500 million from Sh300 million.

General reinsurers will need Sh1 billion in capital, up from the current Sh500 million.