Holmarcom Group to acquire 51pc stake in Monarch Insurance

By Steve Umidha

Holmarcom Group yesterday announced plans to acquire a 51 percent stake of Monarch Insurance Company, in a deal that will now see the Morrocan conglomerate command a controlling stake in the deal.

The transaction deal, whose value is still unknown, will be undertaken through its holding company, Holmarcom Insurance Activities, subject to regulatory approvals by industry regulator, Insurance Regulatory Authority (IRA) as well as the Competition Authority of Kenya (CAK).

Holmarcom Group’s Chairman Mohamed Hassan Bensalah in a statement said the deal was informed by Monarch’s growth prospects and its resilience in the last four decade as a player in the Kenyan market.

“With an expertise in insurance of more than 40 years, solid fundamentals and a market with strong potential, we are convinced that The Monarch Insurance Company has real growth prospects and we are delighted to be able to be part of its evolution in Kenya,” said Mr. Hassan.

The transaction will result in a cash injection to fully capitalize Monarch Insurance Company and unlock funds to drive its strategic growth.

The announcement is also a continuation to a trend the local insurance industry has gotten accustomed to in the last five years.

Kenya saw its first 2021 merger deal by Jubilee Holdings, the market’s largest insurance group in terms of market value with German group Allianz that had made an offer of $100 million to take over several of its African subsidiaries in the non-life insurance segment.

The deal was concluded this month following the acquisition of a 66 per cent stake in the company, representing 1,522,622 ordinary shares, from Jubilee Holdings Limited (JHL), which retained a 34 per cent shareholding in the company.

It also comes amid industry adjustments that has seen IRA adopt new regulations meant to ‘stabilize’ the insurance market. Through the new capital requirement, IRA seeks to reduce instances where insurance companies are unable to pay claims reported by their customers.

The capitalization procedure provides for an increase in the current standard capital requirement by Sh300 million ($2.7 million) for general insurance to Sh600 million, or 20 per cent of the previous year’s net earned premiums. It is however, a commitment that is being considered very high by market analysts.

Holmarcom is the largest private conglomerate in Morocco with a 40-year legacy across Finance, Agro-industry, Real Estate and Distribution & Supply Chain, in Morocco and Africa. Holmarcom’s listed subsidiary Atlanta Sanad Assurance is the Morocco market leader with a market capitalization of $544M (Dec 2020).

Figures by IRA show that in the fourth quarter of 2020, general insurance premiums grew to Sh130.84 billion, while medical and motor insurance classes maintained a leading position in terms of contribution in general insurance business premium at 33.0 per cent and 34.4 per cent respectively.

Motor Commercial gross premiums decreased with the highest amount of Sh1.97 billion followed by Personal Accident with Sh 1.17 billion.