State-controlled Kenya Reinsurance Corporation (Kenya Re) is seeking to amend its governance rules to grant the government control over its board of directors irrespective of its shareholding and introduce a six-year maximum tenure for its chief executive officer (CEO).
The reinsurer, in which the government owns a 60 percent stake, will hold a special general meeting on February 11, 2026, where it will propose to amend its Articles of Association to give the State permanent control on the board through the creation of two classes of shares.
Articles of Association refer to a company's internal rulebook that outlines how the business will be run, managed, and governed. The document defines the roles, responsibilities, and rights of shareholders, directors, and other stakeholders.
The company said in a notice on Friday that the changes will provide “fair representation” of the majority and minority shareholders on the board, whose membership will be cut to nine from the current 11.
If approved, the proposals at the special meeting will see Kenya Re constitute class A and B ordinary shares. Class B shares will be those held by the Treasury Cabinet Secretary on behalf of the government, while Class A shares will be those in the hands of the rest of the reinsurer’s shareholders.
According to the proposal, the State’s class B shares will entitle it to elect five directors to the board, while the rest of the shareholders will be entitled to three directors through their class B shares.
“The holders of class A and B shares shall have the same rights and privileges except with respect to nomination and election of directors,” say the proposed changes to the Articles of Association.
The proposed changes mean that even if the government's stake falls below the 50 percent plus one share threshold that typically confers majority ownership, it will still have influence in the boardroom of the reinsurer that underwrites more than 200 insurers spread over 50 countries.
Jubilee Holdings is the second largest shareholder in Kenya Re (2.73 percent). Local institutional investors (including the government) hold 78.98 percent stake, followed by local individuals (15.94 percent) and foreigners (5.08 percent).
Kenya Re’s proposed shareholding model will mirror that of many private sector companies in developed markets such as the United States and the United Kingdom, where board control has been delinked from shareholding through differentiated voting rights and shareholder agreements.
Companies such as Alphabet (Google's parent company), Meta Platforms (Facebook's parent company) and Berkshire Hathaway operate dual-class share structures that allow control to be exercised independently of ownership.
Kenya Re is also seeking to amend Article 100 on the appointment of the managing directors to cap their term limit at six years. Currently, there is no cap.
“The directors shall be responsible for the recruitment, appointment and removal of the managing director for a term of three years, renewable once and on such terms and with such powers, and at such remuneration... as they may think fit,” reads the proposed amendment.
The absence of a term limit had seen Jadiah Mwarania, the predecessor of the current CEO, Hillary Wachinga, serve at the company’s helm for about 12 years. Mr Mwarania was appointed CEO in April 2011 and exited in December 2022 amid a row with the board.
The rest of the Kenya Re directors will be required to hold office for a maximum of two terms of three years each, as opposed to the current practice where they are allowed to serve a maximum of three terms of three years each.
The company says that at all times, at least one third of the directors will be independent non-executive directors. A director will lose a seat if he or she is absent for three consecutive meetings without board approval.
The company is also introducing the suitability criteria for an independent director, including the requirement that such a person should not have been affiliated with a political party in the preceding five years to the appointment.
Kenya Re last year suspended Dr Wachinga for two months but reinstated him without giving details of how the matter was resolved.
In the financial year ended December 2024, Kenya Re’s net profit retreated by 10.6 percent to Sh4.44 billion, mainly on foreign exchange losses, even as the reinsurance service result—reinsurance revenue less service expenses—grew 4.4 times to Sh2.95 billion.
The reinsurer is staring at increased share of reinsurance business from the Kenyan market through the proposed regulations that seek to increase to 25 percent the portion of business that they must mandatorily place with it.
The Treasury late last year proposed new regulations that will see insurers cede at least a quarter of their reinsurance business to Kenya Re, up from the current 20 percent.
Treasury Cabinet Secretary John Mbadi said the change, under the draft Insurance (Amendment) Regulations, 2025, is designed to strengthen local insurance and reinsurance market, promote financial stability and reduce reliance on foreign reinsurers.
Further, the proposal seeks to make the 25 percent mandatory cession a continuing requirement, remaining in force until Kenya Re is privatised or the regulations are further revised. This will be a departure from the current practice in which the reinsurer reapplies for the mandatory cession each year.
