Kenya Alliance dropped from insurance licensees list for 2013

Insurance Regulatory Authority CEO Sammy Makove at a past event. The agency has put insurers on notice over compliance with law. FILE 

By George Ngigi

 

The insurance sector regulator has dropped Kenya Alliance from its list of licensees for 2013 over failure to reduce majority shareholders’ stake in the business to the maximum limit of 25 per cent.

The action puts pressure on the firm to meet the Insurance Regulatory Authority (IRA’s) requirements to avoid being struck off the insurers’ roll.

Kenya Alliance had booked premiums worth Sh1.5 billion by end of last year, Sh519 million for life business and Sh950 million for general business.

The IRA had given insurers up to December last year to comply with a new law that limits individual ownership of firms to a maximum of 25 per cent. Kenya Alliance is associated with business tycoon Pius Ngugi.

“By the time of application for renewal, they had not completed their divesture arrangements as required under section 23 of the Insurance Act,” said the regulator.

Kenya Alliance was the only insurer denied a licence this year. Concord Insurance was also not on the list having been put under statutory management late last year for failure to honour its liabilities.

 

 

 

 

There were new entrants, AAR Insurance and Resolution Insurance, following a directive by IRA requiring companies offering medical insurance to either convert to insurance companies or revert to brokerage services by last December.

(Read: A third of insurers risk ban for failing to comply with law)    

Insurance companies whose licences are not renewed at the beginning of the year are given up to June to comply with the regulator’s requirement before further actions are taken.

Insurers were given three years from 2009 to comply with the shareholder rule that caps individual ownership of directors and executives at a quarter of an insurer’s shares, but firms had the window to seek a two-year extension through the Finance minister after showing compliance plans.

“The divesture plans have now been completed and submitted to the authority. The company’s licence will be issued in due course,” said the regulator.

Attempts to contact Kenya Alliance Insurance proved futile, with the management said to be in long meetings. The insurer was formed in 1979 and took over the local operations of the Sun Alliance in 1980.

The firm has a total asset base of Sh3.4 billion and has branches in Mombasa, Nakuru, Karatina, Meru, Thika and Machakos. As at the end of last year the life business had a fund of Sh519 million, while the general business had gross premium income of Sh950 million.

In January the IRA had given a three-month ultimatum to nine insurers to get clearance from Institute of Certified Public Secretaries of Kenya (ICSPK) on their shareholding structure. ICSPK had been hired by IRA to establish the shareholding structure of insurers most of whose ownership had remained a tightly guarded secret.

A rush to change the ownership structure has sparked deal making in the insurance sector. UAP Insurance, Resolution Health East Africa and Mercantile Insurance are some of the firms that have invited new shareholders to raise capital and dilute the holding of majority owners