East Africa’s Largest Insurance Firm ‘Doesn’t Envisage Rwanda Entry’

Jubilee Insurance, the region’s largest insurance firm is operating in all the countries of the east African region except Rwanda, and it has no plans of entering the Rwandan market, its Chairman announced Tuesday as he unveiled a new mega business deal.

It means Rwanda will miss out on the benefits of a new ‘strategic partnership’ between Jubilee Insurance or Jubilee Holdings Ltd (JHL) with German’s Allianz, one of the world’s leading insurers and asset managers.

Allianz has become the majority shareholder in Jubilee General Insurance Limited in Kenya. This follows the acquisition of a 66% stake in the company, representing 1,522,622 ordinary shares, from Jubilee Holdings Limited (JHL), East Africa’s largest insurance group who are retaining a 34% shareholding in the company. Allianz acquires controlling stakes for total consideration of KES 10.8 billion (84 million euros, $100 million) while JHL will retain a significant minority stake. 

The acquisition follows the execution of an agreement signed on September 29, 2020, whereby Allianz agreed to acquire the majority shareholding in the short-term general (property and casualty) insurance business operations of JHL in in five countries in Africa, namely, Kenya, Uganda, Tanzania, Burundi and Mauritius.

Following this acquisition, Jubilee General Insurance Limited in Kenya is now a company of the Allianz Group and upon completion of corporate filings will operate as “Jubilee Allianz General Insurance Limited”.

At the event in Nairobi this Tuesday morning announcing the completion of the acquisition process, Jubilee Insurance Chairman, Nizar Juma, was asked about an announced the firm made in 2012 that it would expand to 15 countries by 2020. However, it has yet to come to Rwanda – which has been declared by different entities as a major investment destination.

“Seven or eight years ago, we had entered into final negotiations with [a local company], unfortunately it happened to us not once, but three times, where we completed negotiations and the company changed its mind the next day…That’s why it has not worked out,” said Juma.

He added: “But since then, we believe that Rwanda in terms of insurance companies is into saturation. It’s a very small country. It has got a lot of insurance companies. It does not justify, in our view, even with Allianz to relook to go into a very small country. You know it takes alot for a company like us, particularly with Allianz to go into a new country. You know we put everything into it…it’s a little country….I think that for that reason, I don’t envisage that we would relook at Rwanda.”

The Rwandan insurance industry comprises 15 insurance providers, of which nine are non-life insurers, four are life insurance providers and two are public medical insurers, according to data from industry grouping the Rwanda Insurers Association (ASSAR).

The sector is dominated by one mandatory and occupational hazards scheme (RSSB), which accounts for 95 per cent of the pension total assets, as well as 12 licensed private pension schemes.

A World Bank report on the sector released in August 2019 shows that insurance penetration is very low in Rwanda, and the market is at an early stage of development.

Penetration is still at 1.6 percent and is low even compared to some of its regional peers.

According to the report, insurers were at each other neck, often engaging in irrational price‐cutting and other behaviours, to sell the few traditional products to the same customer segment.

The COVID-19 pandemic has also complicated the situation for the industry like all economic sectors globally.

Meanwhile, Jubilee Insurance’s “marriage” with Allianz, as it was described today, was also billed as a historic development for the Jubilee Group. The two firms said they aim to jointly expand and broaden insurance markets across East Africa, leveraging Jubilee insurance’s deep regional knowledge, extensive networks and brand reputation with the global expertise and capacity of the Allianz Group.

The new firm Jubilee Allianz General Insurance Limited is planning entry into Ethiopia, depending on how the government there acts, said Coenraad Vrolijk, Allianz Africa Regional CEO.

Allianz and JHL also said they will continue to work together to finalize the acquisitions for the businesses in Tanzania, Uganda, Burundi and Mauritius.

Jubilee Insurance was founded in Kenya in 1937 by the Aga Khan Development Network (AKDN), which operates thge Kigali Serena Hotel in Kigali (formerly the Inter-Continental Hotel) and the Lake Kivu Serena Hotel (Kivu Serena) in Gisenyi (formerly the Kivu Sun Hotel). The Aga Khan also owns Nation Media Group (NMG), the parent company of KFM radio in Rwanda, and The East Africa weely regional newspaper that covers Rwanda widely. NMG operates huge interests in different sector all across the east African region.