Prudential PLC chief executive for Africa Matt Lilley with Insurance Regulatory Authority boss Sammy Makove at a media briefing in Nairobi earlier this month. Several international insurance companies have expressed interest in either buying stakes in existing Kenyan enterprises or setting up new outfits. PHOTO | DIANA NGILA | NATION MEDIA GROUP
What you need to know:
Prudential’s takeover of Shield Assurance becomes the fourth acquisition deal in Kenya’s insurance industry, which features 48 underwrites and three reinsurers.
UK company Prudential Assurance has set aside a war chest of Sh1.5 billion to finance its operations as it takes another shot at the Kenyan market after a dramatic exit in 1990. The London Stock Exchange-listed insurer last week announced a comeback with the takeover of Shield Assurance, the life assurance arm of the collapsed Blue Shield Insurance.
Prudential Plc — the UK’s biggest insurer — had operated an insurance firm in East Africa since 1930 but was forced to leave the Kenyan market due to what it calls a harsh operating environment.
“We were compelled to sell to a local Kenyan operator,” said Charles Mangee, chief executive of Prudential Kenya told the Business Daily. “We intend to inject Sh1.5 billion into the business in the next 12 months and make Nairobi the hub of our East African operations.”
The British firm also blamed its departure from Kenya on a weak regulatory regime and restrictions on capital account transactions, which forced the insurer to sell the firm to what was renamed First Assurance Company Ltd. The UK company did not disclose Shield Assurance’s acquisition cost.
Shield Assurance has now been renamed Prudential Kenya and will focus on life insurance products only. The London-based financial services firm says it has been attracted to Kenya’s steady economic growth and expanding middle class with higher disposable income who are increasingly taking up life insurance policy.
“We are delighted that more recently successive regimes and regulators in Kenya have adopted an open, pro-enterprise, pro-growth approach,” said Mr Mangee. “Kenya has a youthful, increasingly affluent population, a highly trained workforce and robust, positive economic growth.”
Prudential said Shield Assurance, one of Kenya’s smallest insurance firms, offered “a good platform for future growth”.
Shield Assurance owes policy holders Sh200 million in unpaid benefits after Blue Shield was placed under statutory management on September 17, 2011. Prudential’s takeover of Shield Assurance becomes the fourth acquisition deal in Kenya’s insurance industry, which features 48 underwrites and three reinsurers.
Morocco’s Saham Group in January last year acquired a 66.7 per cent stake in Mercantile Insurance, which was majority owned by the Pandit family.
The Casablanca-based financial services firm renamed the company Saham Assurance and poached Lydia Kibara from Jubilee Insurance to head its Kenyan business.
