Bloomberg Nairobi
Nairobi Securities Exchange Listed Liberty Kenya Holdings says its considering as many as 10 acquisition targets as part of its five-year strategy to increase its foothold in East Africa’s biggest economy, Bloomberg reports.
“That is on the cards if we can get a suitable candidate,” Managing Director Abel Munda said in an interview with Bloomberg in Nairobi. “We have a number of companies in the country that would be a good fit if they would be up for acquisition.”
Liberty Kenya is a unit of Johannesburg-based Standard Bank Group Ltd.’s Liberty Holdings, which has a presence in 17 African countries after following the continent’s biggest lender into many of the markets. The stock has declined 32 percent in Nairobi this year, compared with a 4.6 percent decline in the FTSE NSE Kenya 25 Index.
The new regulations will trigger a rush by “many insurers who are merely getting by” to raise capital, Munda said. “There are companies finding it challenging to comply and may seek partners to try and infuse capital.”
New Rules
The Insurance Regulatory Authority is also implementing so-called capital charges, which will force companies to park 40 percent of the value of their property investments and 30 percent of their stock holdings with the regulator. This comes after the Association of Kenya Insurers lost a bid to convince authorities to delay by two years the implementation of changes to the country’s laws that increased the amount of capital companies must set aside.
Short-term insurers need to hold 600 million shillings ($5.9 million) in paid-up capital by 2018, from 300 million shillings previously, while long-term insurers need to set aside 400 million shillings from a prior level of 150 million shillings. The regulator can force companies to boost their capital levels to as much as 20 percent of net-earned premiums from the previous year based on the authority’s own assessment of risk the company is exposed to.
The implementation of the risk-based supervision model is “likely to enhance compliance, which in turn will improve the solvency of the industry as a whole and lower its risk,” Elizabeth Ndirangu, an analyst at Genghis Capital Ltd., said in a report released earlier this year. It may also result in “less price undercutting” as insurers deemed as more risky will be forced to sell their policies at levels that will help them cope with the higher capital requirements, she said.
Source -Bloomberg
