IRA CEO, Kaddunabbi Ibrahim Lubega supports exits and mergers of insurance companies to build a strong industry
The financial sector, particularly the insurance industry, has experienced several developments in the form of exits, mergers, and acquisitions for various reasons.
Over the last five years, at least five players in the sector have exited Uganda’s insurance market, while others have merged and some have been suspended by the Insurance Regulatory Authority (IRA).
Rio Insurance Uganda was delicensed in September 2022, and followed AIG, Lion Insurance Company, and NOVA, which had already ceased operations.
“For us at the Insurance Regulatory Authority, mergers are not a concern in themselves; what matters most is the strength and stability of the insurance industry,” said IRA CEO Kaddunabbi Ibrahim Lubega.
“We must be able to assure policyholders that their risks can be underwritten, and that compensation will be delivered without failure.
It is for this reason that we encourage mergers, as they lead to fewer but stronger companies, which are better positioned to serve clients reliably and sustainably,” he told the 30th ICPAU Annual Seminar organized by the Institute of Public Accountants of Uganda.
Last week, Jubilee Holdings Limited approved the sale of all its shares in Jubilee Allianz General in five East African countries, including Uganda, to Sanlam Allianz Africa Proprietary Limited (“SAZ”).
These are Jubilee Allianz General Insurance (K) Limited, Jubilee Allianz Uganda, Jubilee Insurance Company of Burundi S.A., Jubilee Allianz General Insurance Company of Tanzania Limited, and Jubilee Allianz General Insurance (Mauritius) Limited.
It is reported that Jubilee Holdings Limited will receive about 122.4 Billion Shillings (4.5 billion Kenya Shillings) for the sale of general insurance stakes in Kenya, Uganda, Tanzania, and Mauritius to Sanlam Allianz Africa.
Completion of the Transaction is subject to the satisfaction of customary conditions precedent in the relevant jurisdictions, the receipt of necessary regulatory approvals from the Insurance Regulatory Authorities, and the governments.
Upon completion of the Transaction, JHL will cease to hold shares in the Target Companies, according to Margaret Kipchumba, Company Secretary.
Earlier, in April, Jubilee Holdings merged its Ugandan life and health insurance subsidiaries, operating under the new name Jubilee Life Insurance Company of Uganda Limited, in a bid to cut the burden of meeting the new minimum capital requirements issued by the regulator.
Earlier, in what was perceived to be the effects of the COVID-19 pandemic on the industry, Metropolitan Life and Catherine’s Medicare closed down businesses effective 2022, while International Air Ambulance (IAA) transferred its business to Prudential Assurance Uganda Limited.
Other operators who chose not to renew their licenses were told not to operate, and these included. Uganda Global Survey Limited, a loss assessor, adjuster, and risk advisor, and Futures Properties Consultants.
Amidst all these developments in the industry, some domestically and others externally influenced, IRA Uganda says insurance is not for the faint-hearted, and that it is better to have a few but strong operators.
Lubega says that if a company is not ready to withstand the pressure in the market, it can quit, adding that the role of the regulator is to ensure that an exit does not disrupt the industry operations.
On the mergers and acquisitions, Haji Lubega says that this trend is good for ensuring that the premiums collected are retained in the country, unlike when a company exits.
This, according to him, is what will build a strong insurance industry.
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