Shareholders of Stima DT-Sacco have approved its plans to convert its insurance agency into a full-fledged insurance brokerage subsidiary as part of a revenue diversification strategy.
Stima Sacco Chief Executive Gamaliel Hassan said the insurance business is key to supporting its core mandate of offering savings and credit solutions to members.
“The other investment that we do have and which is a good investment is around insurance whereby we have an insurance agency.
“From this year moving forward, which we already got the approval of the annual general meeting, we are looking at converting that into an insurance brokerage because we think that we can get more business,” he told the Business Daily.
The diversification strategy has also seen the firm venture into government securities and unquoted equity investments.
A commercial insurance broker acts as an intermediary between insurance providers and customers. The major responsibility of a broker is to help clients find the most suitable insurance coverage that meets their specific needs and requirements.
“The insurance agency is a subsidiary. It is 100 percent owned by Stima Sacco and the brokerage that is coming to replace that will be 100 percent owned by Stima Sacco,” said Mr Hassan.
The official said the proposed insurance brokerage subsidiary would not underwrite risks but merely acquire and transfer insurance businesses to insurance firms for a fee.
“Sometimes when our agents go out there they are unable to get business because they are considered an agency which is a smaller entity than a brokerage. For the avoidance of doubt, I’m not talking about underwriting, I’m talking about brokerage in the sense of looking for business, of course getting the underwriters who will take the risks, not us,” he said.
“The only thing we get is an agency commission or fee and that business has been profitable for the last three years and we think by converting it into a brokerage we will be able to generate more income.”
Stima Sacco also has investments in Treasury bills and bonds and in unquoted equities that are not listed on the Nairobi Securities Exchange.
“We are looking at the bonds and bills in the market strategically this year and next year and moving forward in the next five years. Right now we have a treasury department and this is what we are looking at doing from a full-fledged treasury centre. Yes we do have some unquoted shares within the industry as well and we do put money where we think we can get a good return,” Mr Hassan said.
The Sacco is banking on the insurance brokerage to boost the growth of its core business which revolves around providing a saving platform for members and giving out loans to members to meet their development needs.
“The insurance becomes our core business for this simple element. For every loan that you give out, it needs to be insured, for every house that members build through our financing it has to be insured and members have to be insured against sickness, death, and anything else that touches on them as members. For us we equate running the brokerage of the insurance agency to supporting our core funds (savings and credit),” the official said.
Stima Sacco’s total deposits grew by eight percent to Sh46.69 billion in 2024, up from Sh43.13 billion in 2023 while its loan book grew by 11 percent to Sh50.24 billion, rising from Sh45.15 billion in the same period.
