NCBA Group has officially taken full control of AIG Kenya Insurance after buying the remaining 66.66% stake for Ksh1.075 billion on July 1, 2024. The deal makes NCBA the 100% owner of the insurer.
At the time of the acquisition, AIG Kenya’s net assets were valued at Ksh2.03 billion. Since NCBA paid far less than the company’s net worth, it recorded a “bargain purchase gain” of Ksh266 million.
Meaning that the deal was made at a lower-than-expected cost, which boosted NCBA’s books.
The move positions NCBA to fully integrate AIG Kenya’s operations and leverage synergies across its banking and insurance businesses.
The insurance firm is a subsidiary of the American International Group Inc. (AIG), a conglomerate with a presence in more than 80 countries.
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In line with IFRS 3 Business Combinations, NCBA appointed its investment banking arm to perform a Purchase Price Allocation (PPA) exercise, which assessed the fair value of AIG Kenya’s net assets as of June 30, 2024, at Ksh2.028 billion.
Moreover, the valuation determined that there were no significant intangible assets to be recognised.
“NCBA Group Plc is pleased to announce that the company has completed the acquisition of 66.67 percent of the issued share capital of AIG Kenya Insurance Company Limited (AIG Kenya), a company incorporated in the Republic of Kenya following receipt of all regulatory and corporate approvals,” NCBA stated in a public notice dated July 1.
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NCBA Bargain Purchase Gain and Revaluation Loss
However, NCBA has reported that the deal came with a hidden cost. NCBA had initially acquired a 33.33% stake in the insurer in 2006 for Ksh332.6 million.
On its financial records, this stake had been valued at Ksh943 million. But when the full acquisition was completed, the value of this earlier stake had to be updated to reflect fair market value, which came in at only Ksh670 million.
Therefore, NCBA had to book a Ksh273 million loss on the revaluation of its earlier investment in AIG Kenya.
With this acquisition, NCBA has solidified its footprint in Kenya’s insurance market, opening up opportunities for cross-selling financial products, increasing customer touchpoints, and driving long-term value through full operational control.
Further, the group is now well-positioned to offer more integrated financial services, enhance customer experience, and deepen financial inclusion.
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