Old Mutual Plc, the U.K.’s third- largest insurer by market value, expects to sell more life- insurance products and begin offering general coverage in Kenya, where premium income is expected to double by 2017.
The company, based in London, will use the 31 branches and 100 service outlets it acquired last month when it bought Faulu Kenya Ltd., a microlender, to increase sales of life-insurance policies, said Peter Muthoka, chairman of Old Mutual Asset Managers (Kenya) Ltd. Plans are being drafted to enter the general-insurance industry, he said in an Aug. 21 interview, without specifying a timeframe.
“We are talking about bancassurance, that is what is going to help in selling our products,” said Muthoka, 70, a former chairman of Kenya Commercial Bank Ltd. Bancassurance is the process of selling insurance through a bank. “The growth in the economy coupled with financial awareness is expected to increase uptake of insurance products,” he said.
Total premiums in Kenya’s insurance industry are forecast to grow to 227.5 billion shillings ($2.6 billion) by 2017 from 116.3 billion shillings last year, according to Business Monitor International, or BMI, the London-based research group. The economy, East Africa’s largest, is forecast to grow by 5.8 percent this year from 4.6 percent in 2012, according to the government.
Life premiums per capita are expected to grow 75 percent to 1,553 shillings in the next five years, BMI said in a report last month. Non-life premiums are forecast to expand 70 percent to 3,109 shillings, bringing total income for that portion of the industry to 151.7 billion shillings by 2017, it said.
Some of the products being considered include cover for the oil, gas and marine industries, Muthoka said. Kenya is expected to become an oil exporter in 2016, following Tullow Oil Plc’s discovery of crude last year.
The company also plans to begin operations in Uganda and Tanzania, to tap into the economic expansion in the two nations.
“I believe that Kenya and the wider East African region hold great potential to enable us to further deepen life insurance penetration, which is still at its emerging stages,” Muthoka said.
Old Mutual already has operations in South Africa, where it was founded 168 years ago, Namibia, Zimbabwe, Swaziland, Malawi, Botswana and recently Nigeria and Ghana.
In Kenya, Old Mutual Life Assurance Co.’s annual loss narrowed to 39 million shillings in 2012 from 200 million shillings a year earlier, attributable to fair-value gains on investments and improved premium income. Old Mutual Asset Managers, Kenya’s largest fund manager, had assets valued at more than 90 billion shillings in June 2013, compared with more than 80 billion shillings a year earlier, Muthoka said.
“Old Mutual Kenya will play a crucial role as the group turns its attention to growing the business in Africa, particularly East Africa,” he said.
Editors: Paul Richardson, Sarah McGregor