AIG’s new cover targets firms with large assets

By James Anyanzwa

AIG Kenya Insurance Company, formerly Alico General Division, has unveiled a new comprehensive cover targeting businesses with up to Sh300 million in asset value.

The AIG combined policy containing 20 sections, will guard commercial enterprises with annual turnovers of up to Sh700 million from threats linked to, among others, political activities and kidnappings.

The policy cover, which was launched two weeks ago, could be easily accessed through premium financing.

"We are organising for premium financing for our customers through a number of commercial banks," says Ms Anna Othieno, the firm’s General Manager in-charge of Property, Energy and Marine.

Othieno says the facility requires minimum premium payments of Sh20,000 and has already received irresistible interest in the market.

"The response is overwhelming from small to large businesses," she told Financial Journal in an interview last week. The cover whose policy documents are issued on the spot also ensures that claims settlement can be fast tracked easily.

Last year, the insurance firm recorded a profit of Sh77 million at the end of the third quarter up from Sh72 million the previous year.

Solvency margin

This came as the AIG Inc, announced a $24.47 billion loss for the same period.

The company, which has been operating in the country for over 37 years, also registered a 15 per cent growth in premiums to Sh1.9 billion.

AIG Kenya is a majority owned subsidiary of American International Underwriters Overseas Ltd, which is a member of the Foreign General Insurance operations.

The latter is AIG’s International insurance operations. The solvency margin for AIG Kenya is 56 per cent compared to a statutory requirement of 15 per cent, while the paid up capital is substantially above the minimum required by law.

AIG is a majority-owned subsidiary of the AIG Inc, with 33 per cent of the company owned by the locals.

Highly profitable

In September 2008, the US government seized control of the tottering giant insurance company in an $85 billion deal that signalled the intensity of its concerns about the danger its collapse could pose to the financial system.

This was followed by the US Treasury’s action, which used $40 billion from its bailout funds to buy stock in the struggling company. The firm, however, separately capitalised American International Underwriters, including AIG Kenya Insurance Company, which has continued to be highly profitable and operating normally.

AIU insurance operations grew 11.5 per cent in the third quarter of 2008 with a profit of $99 million at a combined ratio of 96.7 per cent.

Excluding catastrophes like Hurricane Ike and Hurricane Gustav, the underwriting profit was $232 million at a combined ratio of 92.97 per cent.