Report: Merger in insurance sector to continue
SEE ALSO :Report: Retail sector performs poorlyThe regulation on capital has made it difficult for smaller insurance companies to continue operating without increasing their capital or merging in order to raise their capital base. The report explains that the mergers boom is a result of an aggressive drive by the companies to protect market share in a competitive environment. Some of the deals include the acquisition of a 13.8 per cent stake in Britam by Swiss Re. Though the parties did not disclose the value of the transaction, Cytonn put its market value at Sh425 million. "While the sector remains attractive with vast potential, we have witnessed the insurance sector grappling with low penetration, increased cases of fraudulent claims and the required increase in capital following adoption of a risk-based capital adequacy framework," said Arora. Reacting to the report, Association of Kenya Professional Insurance Agents (AKPIA) Clifford Ochieng said that the mergers would be good for the industry with most underwriters struggling now.
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