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Saccos swap Sh660m claims into shares of Kuscco insurer
Delegates attending a past Kenya Union of Savings and Credit Co-operatives (Kuscco) Limited Annual General Meeting at Hilton hotel in Nairobi on May 28, 2021.
Eighteen saccos have converted Sh660 million worth of claims in Kuscco Mutual Assurance Limited (KMAL) into an undisclosed stake in the entity ahead of the planned sale of a majority ownership in the Kenya Union of Savings & Credit Co-operatives Ltd (Kuscco)-owned insurer.
Kusccco managing director Arnold Munene said in an interview the sealing of a deal to dispose of a key stake of Kuscco Mutual Assurance to strategic investors is likely to conclude in November and saccos have been supporting this through the claims-to-equity transactions.
The Sh660 million is equivalent to 55 percent of Sh1.2 billion outstanding liabilities that the insurer has on its books, mostly being unpaid insurance claims to saccos. Kuscco had said the amounts owed to saccos would be settled by offering the thrift institutions shares in the insurer.
Many co-operatives had taken up cover with the insurer and regularly remitted premiums before the subsidiary was hit by financial headwinds tied to years of alleged mismanagement and theft at Kuscco.
Kuscco suffered a Sh13.3 billion heist under the watch of former officials who have since been charged as the saccos’ umbrella body pushes to recover the money and refund co-operatives.
Saccos who were pursuing claims on KMAL have been converting these unpaid benefits into equity, giving them room to benefit from the planned sale of a significant stake in the firm that booked premiums of Sh1.56 billion in the six months to June 2025.
Mr Munene said in February this year that Kuscco’s interim board approved the sale of a 60 percent stake in the insurer. The deal allows a stake of up to 20 percent to be allocated to related parties, mostly saccos, through conversion of liabilities into equity. The balance of 40 percent is to be offloaded to a strategic investor.
He said the planned sale of the 40 percent stake is on track, with Kuscco currently weighing several offers from banks, insurers and reinsurers.
Kuscco targets to recover at least 70 percent or Sh6.2 billion of the Sh8.8 billion principal amount that saccos had invested in the umbrella entity within the next three years.
“Several expressions of interest have been received, including one from a leading insurance company within the sector. Non-disclosure agreements have been executed, and as such, specific details remain confidential until the process is finalised and the necessary approvals are obtained,” said Mr Munene.
“We expect to finalise discussions with strategic investors by the end of November 2025. This process will unlock the value of Kuscco’s investment in KMAL, allowing the capital to flow back to saccos as envisioned in the recovery strategy.”
He added that the liability-to-equity conversion has been ongoing since March and it is aimed at strengthening the insurer’s capital base to attract strategic investors and ensure long-term sustainability.
Kuscco is keen on relinquishing a key stake in the insurer to enable it recoup its investments in KMAL and refund the capital back to Saccos, in line with its recovery strategy. The investment in the insurer was about Sh1.6 billion.
“Over 60 saccos with outstanding liabilities were formally invited to participate in the conversion through proposal letters, presentations and direct engagements. The bulk of the liability was concentrated within 25 saccos,” said Mr Munene.
Munene said Kuscco is anticipating further approvals by the end of October 2025, resulting in an 85 percent decline in the Sh1.2 billion liabilities.
The amount is the target that was given to a nine-member board that was appointed in April and is keen on initiatives such as those of KMAL, auction of houses and land held by defaulters of mortgages issued under the Kuscco Housing Cooperative and recovery of loans from Saccos who had defaulted on payment.
