High Insurance Growth Potential: Insurance mergers and acquisitions in Kenya are partly driven by stakeholders seeking to close the gap with best-in-class markets globally. Life insurance gross premium income rose by 18.5 percent to Khs.201.56 billion in 2024 which translates to a life insurance penetration rate (premiums as percent of GDP) of 1.24 percent against a GDP of Ksh16.22 trillion. General insurance gross premium income rose by 7.1 percent to Ksh208.52bn in 2024 which equals to a general insurance penetration rate of 1.29 percent. Combined life plus general insurance gross premium income went up by 12.39 percent to Ksh410.08 billion in 2024 which converts to a total insurance penetration rate of 2.53 percent.
In 2023, Luxembourg led the world with the highest insurance penetration rate as its total direct gross premiums written over GDP hit 26.6 percent (life insurance penetration rate of 21.6 percent and general insurance penetration rate of 5 percent).
Hong Kong was second globally and led Asia with total insurance penetration rate of 18 percent (life insurance 16.3 percent and general insurance 1.7 percent).
South Africa was third globally and led Africa with total insurance penetration rate of 18 percent (life insurance 10.2 percent and general insurance of 2.6 percent).
Insurance Minimum Regulatory Capital Hike
Increase in minimum regulatory capital for insurance licenses by Insurance Regulatory Authority (IRA) to avert instability and protect policyholders is another trigger for mergers and acquisitions.
The Finance Act of 2015 increased general insurance paid up capital by 100 percent to whichever is higher between Ksh600 million, IRA determined risk-based capital or 20 percent of net earned premiums.
Life insurance paid up capital rose to whichever is higher between Ksh400 million or IRA determined risk-based capital or five percent of life business liabilities.
Mergers and Acquisitions
Investopedia defines Mergers and acquisitions (M&A) as, ‘the process of consolidating companies or major assets of companies through financial transactions’.
A company’s M&As options for another company include, ‘purchase and absorb another company outright; merge with it to create a new company, acquire some or all of its major assets, make a tender offer for its stock, stage a hostile takeover’.
Also Read: CAK Approves Djibouti’s Tamini Acquisition of Takaful Insurance
Jacqueline Fendt notes the pre-M&A phase has two stages; conception (need identification, definition of M&A goals and strategy) and transaction (choice of candidates, contacting targets, valuations, due diligence, contracts).
The post-M&A phase comprise two stages: integration especially of cultures and ICT systems (definition of integration goals, measures and teams, integration, monitoring and control) and operation (value creation and optimization, destabilization and operationalization of learnings).
Mckinsey identified seven capabilities for the best programmatic acquirers to deliver outsized Total Shareholder Return (TSR). M&A strategy blueprint backed with active portfolio management and capital reallocation to aligned Acquistions.
Effective target prioritization process and high coordination of stakeholders. Strong business case and acquisitions in all business cycles.
Set and capture synergies, be accountable and maintain financial discipline in all stages. Prioritize cultural integration and organization health index.
Deliberately identify and keep the top talent for both companies from leaving via financial and non-financial incentives. Divest from non-strategic acquisitions.
Recent Kenyan Insurance M&As
Saham Group (Morocco) acquired a 66.7 percent majority controlling stake in Mercantile Insurance (Kenya) and rebranded it to Saham Assurance in March 2013.
Mauritius Union Assurance (MUA) acquired Phoenix of East Africa Assurance Company Ltd subsidiaries across Kenya, Uganda, Rwanda and Tanzania in 2014 and rebranded to MUA Kenya.
In February 2014, Metropolitan International (MMI Holdings- South Africa) acquired 75 percent stake in Cannon Assurance general insurance business for $27.3m and merged it with its Metropolitan Life Kenya business to form Metropolitan Cannon.
In addition, Britam acquired 99 percent of Real Insurance in 2014 for $15.74m (Ksh 825 million cash and Ksh550 million share swap) to deepen Britam’s East and Southern Africa presence especially for general insurance in Tanzania, Malawi, and Mozambique.
Also Read: Jubilee Holdings Announces Merger of 3 Insurance Companies
Prudential Plc (UK) acquired Shield Assurance life business for $16.6M (KES1.5bn) in 2014. Leapfrog Investments in 2014 bought majority shares of Resolution Health for KSh 1.68 billion (U S$18.7M (KES1.68bn).
Allianz (Germany) established Allianz Insurance Company of Kenya as a greenfield in 2014 and in 2020 acquired 66 percent of Jubilee General Insurance operations in Kenya, Uganda, Tanzania, Burundi and Mauritius.
Swiss Re bought out Leapfrog Investments 26.9 percent stake in Apollo insurance in 2014. DEG (Germany) bought 11 percent (Ksh1.3 billion) of Zep-Re in 2014 and an additional 5.4 percent (Ksh 1.4 billion) in 2020 to own 14.93 percent.
More deals
IFC bought out Kenya Re’s 11 percent (Ksh1.9 billion) stake in Zep Re in 2015.
Old Mutual raised its ownership of UAP Holdings to 60.66 percent ($253m) in 2015 after buying out 37.33 percent holding by private equity firms (Swedfund, Africinvest, and Abraaj) for $155.5M (Ksh 14.2 billion) to form UAP Old Mutual.
Pan African Insurance Holdings (South Africa) acquired 51 percent of Gateway Insurance general business for KES 561m in 2015.
Barclays Africa Group Limited via Barclays Life Assurance Kenya acquired 63.3 percent of First Assurance (formerly Prudential Assurance) long term insurance life business for KES 2.9bn in 2015.
Prime Bank increased its 37.55 percent shareholding in Tausi Assurance general business in 2017 in February by 1.1 percent (Ksh 23 million), 33.2 percent in November for Ksh727 million and 8.9 percent in December (Ksh194 million) increasing ownership to 80.7 percent.
MUA Insurance (Kenya) from Mauritius acquired Saham Assurance (Kenya) from Sanlam Pan Africa in July 2020 for Ksh1.23 billion in line with its three years “Ambition 2020” strategy to grow by 57 percent its market share in East Africa and become a top 10 insurer in Kenya leveraging its market relevance experience, financial strength and digital innovation.
Holmarcom Insurance (Morocco) acquired 51 percent of Monarch general and life insurance business in 2021 and sold out to Ondoba, Kenyoro, and Equico Thirteen consortium in 2024.
NCBA Group acquired 66.7 percent (Ksh 2 billion) to fully own AIG Kenya and rebranded into NCBA Insurance in 2024. Tamini Insurance (Djibouti) acquired 65 percent of Takaful Insurance of Africa (Kenya) in 2025.
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