Apollo Investment Limited (AIL) has pledged to inject capital into subsidiary APA Life Insurance, newly downgraded by a rating agency over weak capitalisation, on a need basis.
Apollo Group chief executive Ashok Shah said APA Life credit rating downgrade by South Africa-based Global Credit Ratings (GCR) — from BBB+(KE) to BBB(KE) with a negative outlook — will not have weighty impact on the group’s performance.
Apollo Investment Ltd owns the subsidiary.
“The market is aware of our seriousness to continue to grow our market share. We have plans to bolster the significance of our life business. It is important to note APA Life is part of the Apollo Group, which has a strong capital base and the downgrade is unlikely to have any lasting impact on the group,” said Mr Shah.
Last week, GCR said the downgrade reflects APA Life’s sustained weakened capitalisation that stood at Sh373 million in 2016 compared to Sh455 million in 2015, which deviated from expectations of an improvement to about Sh700 million.
The reduction was due to low capital generation from operations, coupled with relatively large transfers from the statutory reserve, cumulatively amounting to Sh274 million over the past two years.
This depleted bonus stabilisation and statutory reserves and fully utilised a capital injection of Sh200 million made in 2015.
APA Life provides an array of life insurance and pension offerings for both individual, groups and corporates and operates in Kenya, Uganda and Tanzania.
Apollo Group has six companies—APA Insurance, APA Life, APA Uganda, Apollo Asset Management, Gordon Court and Reliance Insurance in Tanzania. In September, GCR affirmed the national scale claims paying ability rating assigned to APA Insurance at A(KE).