The French development institution Proparco has acquired a stake of 1.2 billion shillings (10 million dollars) in the Mauritian insurance company MUA Ltd, present in Kenya.
The transaction makes Proparco the largest international institutional investor in MUA, which entered the Kenyan market in 2014 through the acquisition of Phoenix Transafrica Holdings, which operated in Kenya, Tanzania, Uganda and Rwanda under the brand Phoenix East Africa Limited.
MUA boosted its local presence in 2020 by acquiring Nairobi-based Saham Assurance in a deal worth 1.23 billion shillings.
The company merged the two businesses into MUA Kenya last year, after previously coming under pressure from the industry regulator to merge the licenses.
Proparco’s investment will see the French fund obtain 4.1 million ordinary shares of MUA, but the companies did not disclose the size of the stake this represents in the insurer. They said, however, that the deal received the required shareholder and regulatory approvals in July and August respectively.
“With the completion of the final regulatory steps, MUA’s partnership with Proparco begins in earnest. By strengthening the financial capacity of the group, we aim to develop insurance coverage in the East African region and achieve our sustainability objectives,” said outgoing MUA Group Managing Director, Bertrand Casteres.
Proparco will now appoint a director to the board of directors of the Mauritian insurer, thus allowing it to have a say in the strategic direction of the firm.
The company now hopes to leverage this new investment to deepen its reach in East African markets, which also include Seychelles.
Locally, MUA first expressed interest in expanding its presence during former President Uhuru Kenyatta’s visit to Mauritius in 2019, when the company announced its intention to acquire a local insurer as part of what s turned out to be the Saham deal.
The Kenyan insurance market remains attractive to potential investors due to its room for growth, due to low insurance penetration.
IRA data shows insurance penetration in the country fell to 2.34% in 2019 – the lowest in 15 years – due to price undercutting in a sector where players are face increasingly tough competition.
Penetration peaked in 2013 when it stood at 3.44%, but the rate has been declining over the past five years as a large low-income population as well as micro and small businesses are not generally not covered.
The majority of Kenyans without insurance policies decry high premiums, which keeps penetration low despite efforts by the industry regulator to educate the public on the need for coverage.
The 2021 Household Survey on Access to Financial Services shows that the proportion of the population who say they cannot afford insurance has almost doubled in the past five years, from 35.2% to 65.4% in 2016.
The survey was carried out by the Central Bank of Kenya, FSD Kenya and the Kenya National Bureau of Statistics between 2019 and 2021.
Meanwhile, the proportion saying they don’t have insurance coverage because they don’t know about insurance fell to 14.3% from 40.9% in 2016.