Regulator probes shareholding of insurance firms

The insurance regulator has hired investigators to reveal the true identity of owners of Kenya’s insurers to allow it monitor key shareholders and implement ownership quotas for executives and individual investors.

The Insurance Regulatory Authority has hired the Institute of Certified Public Secretaries of Kenya (ICPSK) — the watchdog of company registrars —to establish the shareholding structure of Kenya’s 41 insurance companies.

“We are now waiting for their report which then we can compare with the information that the insurance companies give us,” said Sammy Makove, the chief executive of IRA.

“As you know, most of the insurance companies are owned by layers of holding companies and we need the people behind them. The ICPSK has the capacity to find out the shareholding structure of these companies.”

The ownership of the bulk of Kenya’s insurance companies remains a tightly guarded secret, and IRA is keen on the true owners to allow it implement the shareholder quota’s whose date of compliance ended Friday.

The law bars individual ownership to a maximum of 25 per cent stake and capped the shareholding of directors and senior managers at the same threshold.

Revealing shareholding structure will also allow the regulator to monitor the activities of people controlling more than 10 per cent of Kenya’s insurance firms who can now be forced to sell their shares should they be found guilty of fraud and other malpractices.

These are some of the tough rules targeting executives and directors contained in the Finance Bill 2012 which was unveiled by Finance minister Njeru Githae on June 14.

The Bill declares significant shareholders as those with more than 10 per cent ownership. “A significant shareholder means a person who holds more than 10 per cent of the controlling or beneficial interest in a person licensed under this act,” said Mr Githae.

“A person who, upon assessment under this section, is not certified by the authority as fit and proper to manage or control a person licensed under this Act, shall be deemed to be disqualified from holding such office,” added Mr Githae.

But IRA reckons that it needs a clearer picture of the insurers’ shareholding structure to implement these laws.

The law on the significant shareholders is aimed at reducing the influence and power of key shareholders in insurance firms and ensures that individuals of high integrity sit on the boards and executive suites of Kenya’s insurance firms.

Insurers were given three years from 2009 to comply with the shareholder rule that limits individual ownership of directors and executives at a quarter of an insurer’s shares, but companies had the window to seek a two-year extension through the Finance minister.

Some of the key individuals who have key stakes in insurance companies include Joe Wanjui and Chris Kirubi, both at UAP Insurance, businessman Pius Ngugi (Kenya Alliance Insurance), Peter Nduati (Resolution Health East Africa), and Baloobhal Patel (Pan Africa Insurance Holdings).

The family of the late Central Bank of Kenya governor Philip Ndegwa also owns a majority stake in ICEA Lion Group, which owns ICEA and Lion of Kenya insurance companies through First Chartered Securities.