Jubilee Holdings splits insurance businesses

Jubilee Holdings #ticker:JUB is splitting its insurance businesses to increase efficiency and management focus, with the company creating two new subsidiaries to house medical and general underwriting business.

Operations of the Nairobi Securities Exchange-listed firm has been run under its fully-owned subsidiary Jubilee Insurance Company of Kenya Limited (JICKL).

In a notice, JICKL says it will transfer its medical insurance business to the newly created unit Jubilee Health Insurance Limited. JICKL is also spinning off its general insurance business to the newly formed Jubilee General Insurance Limited.

The transactions, awaiting approval from the Insurance Regulatory Authority (IRA), are to be completed retrospectively and will cover insurance contracts in existence as at December 31, 2018.

Jubilee’s chairman Nizar Juma told the Business Daily that JICKL will now focus on pensions and life insurance which is long-term in nature.

“We are splitting our insurance businesses. It is not a requirement of the law but we anticipate that it will be,” he said, noting that similar business separations have been concluded at the company’s regional operations.

“There will be a rearrangement of capital to fund all the insurance divisions. Each will have enough capital for liquidity and other regulatory purposes,” Mr Juma said.

He added that the various units will ultimately be owned by Jubilee Holdings.

The law requires a general insurer to hold minimum capital of Sh600 million while a life insurer needs at least Sh400 million. Companies running both businesses, also known as composite insurers, are required to hold a minimum capital of Sh1 billion.

Additional capital may be required based on a company’s volume of business or the level of risk in its assets under new rules called risk-based capital supervision.

Jubilee had total capital of Sh28 billion as of December 2018.