NCBA Group, a prominent financial institution in Kenya, has successfully completed the acquisition of AIG Kenya, thereby taking full ownership of the insurance company. The specifics of the transaction amount remain confidential.
The purchase of AIG Kenya from American International Group Inc. has received the green light from several regulatory bodies, including the Competition Authority of Kenya, the Insurance Regulatory Authority of Kenya, and the Central Bank of Kenya, marking a significant expansion for NCBA Group in the financial services sector.
This strategic move comes on the heels of NCBA Group’s strong financial performance, with the company reporting a 4.6% increase in net profit for the first quarter of 2024 and an impressive 55.7% surge in net profit for the fiscal year ending in December 2023.
The intention to acquire AIG Kenya was first made public by NCBA in September 2023, receiving the approval of its board for the transaction. Subsequent to this announcement, NCBA’s subsidiary, Bancassurance Intermediary Ltd, rolled out a digital insurance platform in October 2023, signaling the group’s commitment to expanding its digital offerings in the insurance domain.
NCBA’s history with AIG Kenya extends back 18 years, during which it held a minority interest in the firm. With the completion of this buyout, NCBA Group has acquired the remaining 66.7% stake, making AIG Kenya a fully integrated subsidiary within the NCBA corporate family.
In the year 2022, NCBA Group’s investment in AIG Kenya saw a notable increase, reaching a total of KSh 1.03 billion, up from KSh 987.3 million in the preceding year. This financial commitment underscores the value NCBA placed on its partnership with AIG Kenya. Additionally, the bank received a substantial return on its investment in the form of dividends, which amounted to KSh 90 million in 2022, more than doubling from the KSh 40 million received in the previous year.
AIG Kenya, with a longstanding presence in the Kenyan insurance market since 1972, has established a solid reputation and a diverse client base, serving corporations, small and medium-sized enterprises (SMEs), and individual customers with a range of insurance products.
With the full acquisition of AIG Kenya, NCBA Group is poised to leverage AIG’s strong market presence and customer relationships. This strategic move will enable NCBA to extend its financial services to a broader audience, capitalizing on AIG Kenya’s established brand and market penetration. Concurrently, NCBA’s existing customers will benefit from an expanded suite of options, as the group integrates AIG Kenya’s insurance offerings into its comprehensive portfolio of financial solutions.
When the acquisition plans were initially disclosed in September, John Gachora, the Group Managing Director of NCBA Group, expressed that the move was aligned with the bank’s strategic goal to evolve into a “universal bank” that caters to the comprehensive financial requirements of its customers.
Following the successful completion of the acquisition, Gachora has emphasized the growing importance of insurance as a fundamental financial service for customers. He pointed out that the combination of NCBA’s extensive network of physical branches and digital channels, together with AIG Kenya’s expertise in insurance, is poised to create a powerful synergy. This synergy is expected to facilitate new opportunities that will drive further market penetration of insurance services in Kenya and the broader East African region.
Gachora’s remarks highlight NCBA’s intention to integrate AIG Kenya’s insurance products into its existing financial services portfolio, thereby providing a more holistic financial ecosystem to its customers. This integration is anticipated to not only meet the diverse financial needs of NCBA’s clientele but also contribute to the growth and development of the insurance sector within the region.
The Kenyan insurance industry, valued at $2.3 billion, is attracting significant interest from the country’s banking sector, with NCBA Group not being the sole financial institution seeking to capitalize on this lucrative market. Equity Group, another major banking entity in Kenya, has also set its sights on the insurance sector.
In May 2023, Equity Group announced that it had received preliminary approval from the Insurance Regulatory Authority (IRA) to establish a General Insurance Company. This move by Equity Group indicates a strategic initiative to diversify its offerings and tap into the insurance market, mirroring the trend of financial institutions expanding beyond traditional banking services to provide a more comprehensive suite of financial products to their customers.
The entry of these banking giants into the insurance domain suggests a shift towards a more integrated financial services model, where banks are looking to offer a one-stop-shop for their clients’ banking and insurance needs. This trend is expected to enhance competition, drive innovation, and potentially lead to more affordable and accessible insurance products for consumers in Kenya.
