This is BMI's second report on Kenya's insurance sector. As is the case with our other insurance sector reports, we seek to place the non-life and life segments in a regional and global context. We discuss the main insurance lines and describe the competitive landscape in some detail. Kenya provides evidence that the insurance industry can thrive in Sub-Saharan Africa in face of highly challenging economic and ' especially ' political problems. At the end of 2008 the combined assets of Kenya's 42 insurers amounted to KES146.12bn, or nearly US$2bn. Both the non-life and the life segments sustained double-digit growth over the last five years. One does not need to make aggressive or radical assumptions to produce a scenario where the double digit-growth continues through the forecast period. The development of the life segment is particularly encouraging. Life premiums account for about onethird of the total. Notwithstanding the fact that Pan Africa, the largest player in the segment, with a market share of around 20%, has a strategic alliance with a subsidiary of South Africa's Sanlam, the segment is dominated by local firms. In essence, Kenyan institutions are gathering long-term savings from Kenyan investors. In this respect, Kenya is hugely different from Nigeria and even from much richer and more stable countries in the Middle East. As is the case in the Middle East, and to a lesser extent in Nigeria, the insurance industry is strengthened by its links with local entrepreneurs. In 1980 the government introduced laws that required local ownership of the insurance companies. As a result, insurers have since tended to be owned and/or run by local entrepreneurs with a deep understanding of the challenges of doing business in Kenya and well developed tolerance for risk. A side effect, probably unanticipated by the government nearly 30 years ago, is that Kenya's insurance sector is fragmented. In this respect it is similar to its counterpart in Nigeria, but also the Philippines and Indonesia or the UAE, where local entrepreneurs often see insurance as a valuable adjunct to the other activities undertaken by the family conglomerate. The three largest non-life companies ' The Jubilee, APA and Kenindia together speak for about one-quarter of total premiums written in the segment. APA is the consolidation of Apollo with Pan Africa's non-life operations. However, there is scope for much more consolidation. AIG's Kenyan subsidiary ' now renamed Chartis ' is one of the 10 largest non-life firms. It is important to note that foreign insurers are not entirely absent from Kenya. Aside from Sanlam's involvement with Pan Africa, Old Mutual ' another giant from South Africa ' has a small life operation in Kenya. Four major Indian insurers ' New India Assurance, Oriental Insurance, United India Insurance and Life Insurance Corporation of India ' are minority shareholders in Kenindia. What all these foreign groups have in common is that, relative to multinational insurance companies from developed countries, they have a high tolerance of emerging markets risk and low exposure to the volatility of capital markets in the wake of the global financial crisis. Another indicator of the strength of Kenya's insurance sector is that non-life insurance has moved well beyond motor-related lines. Figures published by the Association of Kenya Insurers (AKI) indicate that private and commercial motor insurance respectively generated gross premiums of KES6,102.7mn and KES9,322mn in 2008. The next largest lines were personal accident (KES7,070mn), fire-industrial (KES4,322.7mn) and workers' compensation (KES2,145mn). Writing in early 2009, AKI Chairman Nelson C Kuria suggested that the long-term future for the insurance sector was bright, given the low levels of penetration, increasing usage of information and communication technology (ICT), research, product development and focus on new distribution channels. Nevertheless, the challenges are significant. One

1. Find Industry reports, Company profiles
ReportLinker and Market Statistics
>> Get this Report Now by email!
Kenya Insurance Report Q3 2010
Published on May 2010
Report Summary
This is BMI's second report on Kenya's insurance sector. As is the case with our other insurance sector reports, we seek to place the
non-life and life segments in a regional and global context. We discuss the main insurance lines and describe the competitive
landscape in some detail.
Kenya provides evidence that the insurance industry can thrive in Sub-Saharan Africa in face of highly challenging economic and '
especially ' political problems. At the end of 2008 the combined assets of Kenya's 42 insurers amounted to KES146.12bn, or nearly
US$2bn. Both the non-life and the life segments sustained double-digit growth over the last five years. One does not need to make
aggressive or radical assumptions to produce a scenario where the double digit-growth continues through the forecast period.
The development of the life segment is particularly encouraging. Life premiums account for about onethird of the total.
Notwithstanding the fact that Pan Africa, the largest player in the segment, with a market share of around 20%, has a strategic
alliance with a subsidiary of South Africa's Sanlam, the segment is dominated by local firms. In essence, Kenyan institutions are
gathering long-term savings from Kenyan investors. In this respect, Kenya is hugely different from Nigeria and even from much richer
and more stable countries in the Middle East.
As is the case in the Middle East, and to a lesser extent in Nigeria, the insurance industry is strengthened by its links with local
entrepreneurs. In 1980 the government introduced laws that required local ownership of the insurance companies. As a result,
insurers have since tended to be owned and/or run by local entrepreneurs with a deep understanding of the challenges of doing
business in Kenya and well developed tolerance for risk.
A side effect, probably unanticipated by the government nearly 30 years ago, is that Kenya's insurance sector is fragmented. In this
respect it is similar to its counterpart in Nigeria, but also the Philippines and Indonesia or the UAE, where local entrepreneurs often
see insurance as a valuable adjunct to the other activities undertaken by the family conglomerate. The three largest non-life
companies ' The Jubilee, APA and Kenindia together speak for about one-quarter of total premiums written in the segment. APA is
the consolidation of Apollo with Pan Africa's non-life operations. However, there is scope for much more consolidation.
AIG's Kenyan subsidiary ' now renamed Chartis ' is one of the 10 largest non-life firms. It is important to note that foreign insurers are
not entirely absent from Kenya. Aside from Sanlam's involvement with Pan Africa, Old Mutual ' another giant from South Africa ' has a
small life operation in Kenya. Four major Indian insurers ' New India Assurance, Oriental Insurance, United India Insurance and Life
Insurance Corporation of India ' are minority shareholders in Kenindia. What all these foreign groups have in common is that, relative
to multinational insurance companies from developed countries, they have a high tolerance of emerging markets risk and low
exposure to the volatility of capital markets in the wake of the global financial crisis.
Another indicator of the strength of Kenya's insurance sector is that non-life insurance has moved well beyond motor-related lines.
Figures published by the Association of Kenya Insurers (AKI) indicate that private and commercial motor insurance respectively
generated gross premiums of KES6,102.7mn and KES9,322mn in 2008. The next largest lines were personal accident
(KES7,070mn), fire-industrial (KES4,322.7mn) and workers' compensation (KES2,145mn).
Writing in early 2009, AKI Chairman Nelson C Kuria suggested that the long-term future for the insurance sector was bright, given the
low levels of penetration, increasing usage of information and communication technology (ICT), research, product development and
focus on new distribution channels. Nevertheless, the challenges are significant. One is that that many Kenyans have little
understanding of insurance and/or a low opinion of it. A survey by the AKI in 2003 found that the development of group life, for
instance, was hampered by the rigidity of products, the limited scope of coverage, inefficient marketing and legislation. The providers
had to deal with a lack of consumer education, the lack of incentives to employers, the domination of the market by brokers and
cut-throat price competition. The comments from Kuria in his introduction to AKI's 2008 annual report (which was released in early
2009) indicate that these problems persisted nearly seven years later. However, Kuria was hopeful that the new insurance act would
'accelerate the growth and development of the insurance sector tremendously'. We discuss a number of scenarios as the country
Kenya Insurance Report Q3 2010 Page 1/5

2. Find Industry reports, Company profiles
ReportLinker and Market Statistics
moves away from the disputed 2007 election and towards the next elections in 2012. In most scenarios, the insurance industry ' which
has weathered very difficult conditions in 2008 and 2009 ' should continue to thrive. A wholesale breakdown in law and order would
be disastrous. As the AKI notes in its 2008 annual report: 'Major man-made disasters caused losses of US$7.8bn in 2008, with
large-scale industrial fires, explosions and losses in the energy sector at the top of the list. Man-made catastrophes resulted in 5,600
deaths in 2008.' Most casualties were the result of shipping and boating accidents. However, social unrest and bombings also
claimed many lives.
Issues To Watch
Product Development And Pricing
In common with their counterparts in other countries in Africa and the Middle East, the Kenyan insurers have often produced
sub-optimal and undifferentiated products and have competed on price. This needs to change if the profitability of the sector is to
grow. In 2008 the industry made a net profit before tax of KES5.05bn on gross earned premiums of KES46.32bn and total assets of
around KES146.12bn. During that year 21 companies, or about half the total, made underwriting profits. Collectively, life insurers
suffered an underwriting loss of KES1.29bn.
Further Industry Consolidation
Given that commercial challenges are limiting the profitability of many players, we would see any consolidation as a favourable
development. We would also be heartened by any move of the foreign groups who are already present in Kenya to increase their
investment. We recognise that the small present (and, in world terms, future) size of the market means that Kenya is unlikely to be
seen as a country of opportunity by many major multinationals.
Actions Of The IRA
From May 2007 regulatory responsibility for the insurance sector was transferred to the Insurance Regulatory Authority (IRA). In
2008 the IRA published a corporate plan that indicates it has a clear understanding of the problems facing the industry. The IRA is
likely to have a role in the development of the new insurance act (as has the AKI). The IRA's actions over the next year or two will
provide an indication of the extent to which the industry's problems and challenges are likely to be overcome.
Table of Content
Executive Summary ........................ 5
Table: Kenya's Insurance Sector At A Glance .......... 5
Key Insights On Kenya's Insurance Sector ............... 5
Issues To Watch 7
SWOT Analysis .... 9
Kenya Insurance Industry SWOT .. 9
Kenya Political SWOT .................. 9
Kenya Economic SWOT .............. 10
Kenya Business Environment SWOT ....................... 10
MetLife's Acquisition Of ALICO .... 11
Table: ALICO At A Glance ......... 12
Table: ALICO's Pre-Tax Profits By Segment And Region Contribution, Year To November 30 2009 (%) .. 13
Table: ALICO ' A Market Leader In Japan ............ 13
Table: MetLife's Acquisition Of ALICO .................. 14
Table: MetLife And ALICO Combined .................... 15
Projections And Forecasts ............ 16
Table: Insurance Premiums, 2006-2014 ................. 16
Projections And Drivers Of Growth........................ 16
Table: Growth Drivers, 2006-2014 ......................... 17
Country Update . 18
Macroeconomic Activity ............. 18
Table: Kenya ' GDP By Expenditure, 2007-2015 .. 19
Kenya Insurance Report Q3 2010 Page 2/5

3. Find Industry reports, Company profiles
ReportLinker and Market Statistics
Political Outlook ......................... 20
Insurance Business Environment Rating ................ 24
Table: Kenya ' Insurance Business Environment Indicators ............... 24
Table: Middle East And Africa Insurance Business Environment Rankings .................... 25
Regional Context ........................... 26
Table: Non-Life Premiums In A Regional Context, 2008 .................... 26
Table: Life Premiums In A Regional Context, 2008 27
The Main Players In Kenya's Insurance Market ...... 28
Company Profiles .......................... 30
APA ................. 30
Table: APA Insurance Limited's Financial Results, 2005-2008 (KESmn) ....................... 30
Apollo ............. 31
Table: Apollo's Financial Results, 2008 (KES'000) ........................... 31
Table: Apollo's General Insurance Business ' Premium Income By Segment, 2007 And 2008 (KES'000) . 32
Blue Shield Insurance ................. 33
Table: Blue Shield Insurance's Balance Sheet, December 31 2006 (KES'000) ............... 33
Chartis ............ 34
Jubilee Holdings ......................... 35
Table: Jubilee Holdings' Gross Earned Premiums By Segment, 2007 And 2008 (KES'000) ....................... 36
Table: Jubilee Holdings' Consolidated Profit And Loss Account, 2007 And 2008 (KES'000)..................... 36
Kenindia ......... 37
Pan Africa ....... 38
Table: Pan Africa's Long-Term Insurance Business, 2007 And 2008 (KESmn) .............. 38
Table: Pan Africa's Profit And Loss Account, 2007 And 2008 (KESmn) ......................... 39
Table: Pan Africa's Balance Sheet, 2007 And 2008 (KESmn) ............. 39
UAP ................ 40
Table: UAP's Premiums, 2007 (KES'000) .............. 40
Country Snapshot: Kenya Demographic Data ........ 41
Section 1: Population ................. 41
Table: Demographic Indicators, 2005-2030 ........... 41
Table: Rural/Urban Breakdown, 2005-2030 .......... 42
Section 2: Education And Healthcare ..................... 42
Table: Education, 2002-2005 ..... 42
Table: Vital Statistics, 2005-2030 ........................... 42
Section 3: Labour Market And Spending Power ..... 43
Table: Consumer Expenditure, 2000-2012 (US$) ... 43
Methodology ...... 44
Insurance Business Environment Ratings ............... 45
Table: Insurance Business Environment Indicators And Rationale ..... 45
Table: Weighting Of Indicators .. 47
Kenya Insurance Report Q3 2010 Page 3/5

4. Find Industry reports, Company profiles
ReportLinker and Market Statistics
Fax Order Form
To place an order via fax simply print this form, fill in the information below and fax the completed form to:
Europe, Middle East and Africa : + 33 4 37 37 15 56
Asia, Oceania and America : + 1 (805) 617 17 93
If you have any questions please visit http://www.reportlinker.com/notify/contact
Order Information
Please verify that the product information is correct and select the format(s) you require.
Kenya Insurance Report Q3 2010
Product Formats
Please select the product formats and the quantity you require.
Digital Copy--USD 530.00 Quantity: _____
Contact Information
Please enter all the information below in BLOCK CAPITALS
Title: Mr Mrs Dr Miss Ms Prof
First Name: _____________________________ Last Name: __________________________________
Email Address: __________________________________________________________________________
Job Title: __________________________________________________________________________
Organization: __________________________________________________________________________
Address: __________________________________________________________________________
City: __________________________________________________________________________
Postal / Zip Code: __________________________________________________________________________
Country: __________________________________________________________________________
Phone Number: __________________________________________________________________________
Fax Number: __________________________________________________________________________
Kenya Insurance Report Q3 2010 Page 4/5

5. Find Industry reports, Company profiles
ReportLinker and Market Statistics
Payment Information
Please indicate the payment method, you would like to use by selecting the appropriate box.
Payment by credit card Card Number: ______________________________________________
Expiry Date __________ / _________
CVV Number _____________________
Card Type (ex: Visa, Amex…) _________________________________
Payment by wire transfer Crédit Mutuel
RIB : 10278 07314 00020257701 89
BIC : CMCIFR2A
IBAN : FR76 1027 8073 1400 0202 5770 189
Payment by check UBIQUICK SAS
16 rue Grenette – 69002 LYON, FRANCE
Customer signature:
Please note that by ordering from Reportlinker you are agreeing to our Terms and Conditions at
http://www.reportlinker.com/index/terms
Please fax this form to:
Europe, Middle East and Africa : + 33 4 37 37 15 56
Asia, Oceania and America : + 1 (805) 617 17 93
Kenya Insurance Report Q3 2010 Page 5/5