British insurance firm buys Blue Shield arm Assurance
Blue Shield Insurance company building in Upper Hill, Nairobi. PHOTO | FILE
What you need to know:
Prudential Plc plans to invest Sh1.5 billion in Kenyan Shield Assurance.
The UK firm bought the insurer from the troubled Blue Shield Group after a year of scouting for a life insurer.
The firm’s expansion to Kenya and the region targets the young population whose income is growing, but has a low uptake of insurance.
Prudential Plc, one of the world’s largest insurance firms, has acquired Shield Assurance in a Sh1.5 billion investment as it seeks a toehold in East Africa.
The UK firm bought the insurer from the troubled Blue Shield Group (under statutory management) after a year of scouting for a life insurer.
Prudential chief executive Matt Lilley said while the finer financial details cannot be revealed, the insurer will invest Sh1.5 billion over the next 12 months, most of which will go towards paying for the new subsidiary.
Part of the money will be used to pay outstanding benefits on policies that have matured.
The company’s expansion to Kenya and the region targets the young population whose income is growing, but has a low uptake of insurance.
“That’s why we are opening for business here. And we are making Kenya the hub for our East African operations,” said Mr Lilley.
Regulators say despite the low penetration, the local insurance industry is growing fast and highly profitable compared to other emerging and frontier markets.
Kenya’s life insurance penetration stood at 1.2 per cent as at the end of 2013 which is lower than South Africa that had a 12.7 per cent penetration rate.
Insurance Regulatory Authority (IRA) chief executive Sammy Makove said despite the small size, investors are looking to enter the market which has been growing annually at 20 per cent.
“We have seen a lot of interest over the last two years which is natural, Kenya being one of the fastest growing markets,” said Mr Makove.
Kenya is the second African market that Prudential has set up shop in, the first being Ghana where it bought Express Life earlier in the year.
Prudential said once it builds its business, it will use the proceeds to invest in ports, roads and other infrastructure projects in line with its long-term business model.
“To ensure that we can meet our customers’ long-term expectations, we invest their savings on long-term tangible assets here in Kenya,” said Mr Lilley.
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