Shariah insurer, Takaful set for new ownership in Sh500 million deal

Kenya’s Takaful Insurance is set to welcome a new controlling shareholder after the Competition Authority of Kenya (CAK) approved the sale of a majority stake to Djibouti’s Tamini Insurance S.A.

The move highlights an increasing appetite by foreign firms to invest in Kenya’s financial services sector.

Insiders familiar with the matter disclosed that Tamini Insurance S.A., connected to Salaam Investment Bank Kenya and Salaam Microfinance Bank Limited, will pay approximately Sh500 million for a 65% stake.

Both Salaam Investment Bank Kenya and Salaam Microfinance Bank Limited are owned by Djibouti’s Salaam African Bank.

The CAK’s approval came after a review confirmed that the deal would not upset competition in the general insurance sector or cause public interest issues.

"Post-merger, the proposed transaction will not result in any change in the market share of the merged entity since the acquirer is not undertaking a similar business in Kenya," said the regulator.

It further noted that: "the proposed transaction will not affect the structure and concentration of the general insurance market. Additionally, the merged entity will continue to face competition from other players who control over 99% of the market."

The regulator also said that the merger would not negatively impact employment, affect the competitiveness of small and medium enterprises, or disrupt the ability of specific industries to compete globally.

Takaful Insurance is one of only two Shariah-compliant insurance companies in the country, alongside First Community Takaful, which is supported by First Community Bank.

Takaful focuses solely on general insurance products and holds a 0.45% share in the Kenyan insurance market.

Old Mutual currently leads the general insurance sector with a 9.67% share, followed closely by Britam and APA, with 8.91% and 8.76% shares, respectively.

The shareholders of Takaful Insurance include a blend of corporate and individual investors such as CIC Insurance Group, Hass Petroleum, Allamagan Ventures, Omash Investments, Koromey Kommunications, Soliton Investment Company, Luxor Trading Company, and three individuals.

Data from the Insurance Regulatory Authority (IRA) shows that Takaful Insurance reported a Sh15.5 million loss in the quarter ending September 2024, compared to a Sh6.9 million profit in the previous quarter.

The company's filings show that its main lines of business are private and commercial motor insurance, industrial fire, theft, and workmen's compensation.

It collected Sh742.8 million in premiums and paid Sh303.5 million in claims.

Kenya’s insurance industry is currently facing challenges due to low consumer spending, with companies introducing installment options to curb policy surrenders and cancellations.

IRA data reveals that surrenders in the first nine months of 2024 reached Sh11.5 billion, more than double the Sh4.66 billion posted during the same period a year earlier.

The entry of Tamini Insurance into the Kenyan market points to a deepening foreign interest in the country’s insurance space, as local firms work to stay afloat in a tough economic climate.