Cytonn projects more mergers in insurance
SEE ALSO :Report: Retail sector performs poorlyThe new capital requirement has made it difficult for smaller insurers to continue with operations without increasing their capital or merging. The report attributed the 'mergers boom' to aggressive drive by the firms to protect their market share. Key deals included the acquisition of a 13.8 per cent stake in Britam by Swiss Re whose market value Cytonn put at Sh425 million. Others include Barclays Africa Group’s Sh2.9 billion acquisition of Kenya First Assurance and Africa Merchant Assurance looking to raise between Sh500 million to 700 million through the sale of a stake. Cytonn’s Head of Private Equity Shiv Arora noted that fraud remained one of the biggest challenges to the sector. He said 25 per cent of insurance industry income is fraudulently claimed, with motor and medical claims being the most common even as penetration remained at 2.4 per cent.
SEE ALSO :Informal spaces take on malls"While the sector remains attractive with vast potential, we have witnessed the insurance sector grappling with low penetration, increased cases of fraudulent claims," said Arora. Association of Kenya Professional Insurance Agents official Clifford Ochieng rooted for mergers, saying most underwriters were struggling. Jubilee was listed as the most attractive insurer in potential return and financial health, followed by Sanlam, Liberty Holdings and Britam.
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