Pan Africa Group buys 51pc stake in Gateway Insurance

NAIROBI: Pan Africa Insurance Holdings Ltd (Pan Africa) has finalised the acquisition of a majority shareholding in Gateway Insurance Company Ltd (Gateway) after signing a deal that entitles it to a 51-per cent stake in the firm's ownership.

The transaction of 31,948,950 ordinary shares priced at Sh17.56 per share will see Pan Africa pay shareholders of Gateway over Sh561 million.

"We are delighted to have concluded this transaction giving us a majority stake in Gateway. Pan Africa's group strategy includes diversifying investments in a way that will maximise and meet client expectations while growing shareholder value. We are on a path to make Pan Africa a one-stop-shop for our client financial solutions.'' Chairman John Simba said.

INSURANCE MARKET

He said the group's return to the general insurance market comes at a time when statistics on insurance penetration in the country, at a low of 3.5 per cent, shows a huge opportunity. He noted that financial services are a critical component of any economy which intends to record sustainable growth.

"Insurance companies only account for 32 per cent of financial service providers in Kenya excluding co-operative societies and a measly 0.3 per cent when co-operative societies are included. While a saving culture is budding among our people - which is how it should be - there is a gap in the area of risk management which cannot be ignored.'' added Simba.

''Gateway's established brand in short term insurance service and a countrywide presence dovetails into Pan Africa strategy." he said.

Simba said the group structure would change to incorporate the new general insurance subsidiary so that the group would be led by Group Chief Executive while business lines (Life, General and Asset Management) would be headed by respective chief executives.

The Group Chief Executive Mugo Kibati added that this new business venture will see Pan Africa compete effectively with their composite peers in the industry.

''While we only have 11 out of 48 such providers currently, the direction the industry is taking requires a provider to offer a comprehensive solution from long term (life) to short term (Medical, motor, commercial, property etc) insurance solutions," he said.

"We shall remodel our business so as to create synergies within the group and maximise the capacity. We also expect that the General insurance license will boost our intention to tap into other industries such as the upcoming oil market.'' Kibati added that the group considered acquisition over partnership in the interest of ensuring optimum quality of service.

The acquisition comes shortly after Mr Kibati was named new Group CEO and Mr Stephen Kamanda new CEO for the Life Business.