Investment firm gears up for Old Mutual stake

According to the latest Association of Kenyan Insurers (AKI) report for 2008, OMLAC has recorded declining gross premiums in the last six years from commanding a market share of 7.9 per cent in 2004 to 3.9 per cent in 2008.

To change this trend, Old Mutual is planning to significantly grow its distribution channels.

This will involve investing in a tied agency force while diversifying to other channels including independent agents and brokers.

Growth across the whole insurance industry as a percentage of GDP has been sluggish.

Factors affecting this include value for money, access to products, product design, and public education of insurance products.

Industry players

This has put pressure on insurance industry players to diversify their distribution channels from less traditional forms while lowering costs.

Product design through lowering of minimums on its life products to service mass markets is an avenue Old Mutual sees will grow earnings.

Only time will tell whether the strategies Old Mutual plans to undertake will bear fruit, in Kenya’s rapidly evolving financial industry, failure to read the winds of change can spell doom for an entity.

Old Mutual’s life funds became amongst the most lucrative when it bought into stocks during the depressed years at the bourse between 1998 and 1999.

This strategy would prove to be a blessing at the height of the bull market that started with the economic resurgence in 2003 but which came to an end as an overheated market cooled off in March 2007.