First Assurance, majority owned by Barclays Africa, is set to receive Sh300 million capital injection as it seeks to grab more market share in the competitive insurance sector.
A credit rating report by South African Global Credit Rating’s (GCR) discloses that this will be the second round of funding by Barclays Africa since acquisition of the insurer having recently put in Sh400 million.
“Capital generation has been supported by sound retained profits and more recently an injection of Sh400 million, with a further Sh300 million planned over the short to medium term. The capital injection formed part of the ownership buyout by Barclays Africa Group in 2015,” reads part of the rating report.
The capital injection improved the insurer’s cash position to be equivalent to 17 months its average monthly premium payment, up from 14 months cover in 2014.
GCR retained the First Assurance’s claims paying ability rating at ‘A’ with its outlook termed as stable.
First Assurance enjoys a 3.8 per cent market share, which is a gain from 3.5 per cent at the end of last year.
“The insurer expects to cement its competitive position, supported by strategic benefits and financial support from the group” said GCR.
Johannesburg-based Barclays Africa acquired 63.3 per cent of First Assurance last year at Sh2.2 billion. The lender has sought to entrench its presence in the insurer by recently making changes to the top executive suite with the exit of Stephen Githiga as managing director.
The lender has been lagging behind its rivals in the banking sector who have delved into the insurance sector through the bancassurance model.
Banks are counting on their financial strength, wider outreach and public confidence to penetrate the insurance sector, which has been dogged by the collapse of some key players in the past.
General insurance penetration in the country is currently below four per cent underlining the opportunities in the sector.