Barclays Africa has entered into a joint venture deal with local businessmen Ayisi Makatiani and Darshan Chandaria to launch a life insurance firm.
This marks a rare partnership that the global lender has formed with local investors in its Nairobi-based subsidiaries.
Johannesburg-based Barclays Africa is the controlling shareholder of Barclays Life Assurance Kenya with a two-thirds stake in the startup.
Investment vehicles headed by Mr Makatiani and Mr Chandaria — PE firm Fanisi Capital and Chandaria Industries respectively — own the remaining third equity.
The formation of the company is part of Barclays’ strategy of deepening its presence in Africa’s financial services after consolidating most of the UK firm’s subsidiaries under the South Africa regional head office.
The life insurer, which is managed separately from Barclays Bank of Kenya, is the multinational’s latest subsidiaries in the local market.
Barclays has also set up life insurance businesses in other African markets including South Africa, Botswana, Mozambique and Zambia.
“Barclays Africa wants to extend its footprint of holistic financial products and services across the continent in the most convenient, accessible and affordable way possible to meet the evolving needs of customers,” said Willie Lategan, the CEO of wealth, investment management and Insurance at Barclays Africa.
“Our entry into the Kenyan life insurance market provides us with a strong platform to further expand our offering in East Africa.”
Barclays Life Assurance Kenya is offering education, credit life, personal accident, and funeral policies.
The firm is initially targeting 500,000 customers through its sister company Barclays Bank of Kenya in the bancassurance model which allows lenders to sell insurance products as agents.
The lender was recently awarded a bancassurance licence by the Insurance Regulatory Authority (IRA), a move that saw it open Barclays Insurance Agency in February.
Barclays Life will be competing against players like Jubilee Holdings, Pan Africa Holdings and Britam Group. Premiums in this segment stood at Sh162 billion last year, equivalent to 3.5 per cent of the country’s GDP.
This signals significant growth opportunity in the coming years in the context of the growing middle class and increased awareness of the role of insurance in hedging risks.
“The life insurance market in Kenya is registering 20 per cent year-on-year growth but our sector still represents a tiny fraction of the country’s rapidly expanding economy,” said William Maara, the managing director of Barclays Life.
“Barclays Life Assurance Kenya will enable more Kenyans to protect themselves against life’s misfortunes as well as save for long term aspirations such as education and retirement.”
The life insurance company is part of the multinational’s strategy of creating units in various financial services sectors to create synergies that attract more customers under a financial services supermarket model.
“Today’s announcement is an important milestone for the Barclays brand and it represents our first step towards the creation of new innovative business in Kenya,” said Jeremy Awori, the chief executive of Barclays Bank of Kenya.
“We will leverage our expansive distribution network, our legacy of offering quality financial advice in the country and our regional and global expertise to provide our customers with cutting edge insurance products and quality service.”