Time flies with great content! Renew in to keep enjoying all our premium content.
Prime
Liberty Kenya to sell Tanzania stake amid Sh4bn claim
The Liberty Life Managing Director, Abel Munda (left) engages in a discussion with the Liberty Kenya Holdings Plc Chairman Phillip Odera (centre) and Heritage Insurance Managing Director, Godfrey Kioi during the annual general meeting of Liberty Kenya Holdings Plc.
Liberty Kenya Holdings is in talks with an undisclosed buyer to sell its entire stake in Heritage Insurance Company Tanzania in a deal that will mark the end of its over 25-year stay in the neighbouring country.
The Kenyan listed insurer, which holds a 60 percent stake in the Tanzanian unit, said the buyout talks are at an advance stage without giving details.
The exit from Tanzania comes in the wake of the Heritage Insurance reporting a claim of Sh4 billion from an undisclosed firm in the mining industry.
But the insurance firm disclosed that the huge claim will not put a substantial dent on its books because a reinsurer will settle a significant share of the compensation.
“The group is in advanced negotiations to dispose of its 60 percent shareholding in Heritage Insurance Company Tanzania Limited.
“The board of directors does not anticipate that the transaction, if it goes ahead, will materially impact the group’s results or financial position,” said Liberty Kenya Holdings.
The disclosures came on the back of Liberty Kenya indicating that its net profit for the six months ended June nearly tripled to Sh632 million from Sh213 million reported in a similar period last year.
Liberty Kenya, which is 73.47 percent owned by South Africa’s Liberty Holdings Limited, has not disclosed the value of the deal and the firm seeking to acquire Heritage Insurance.
The Tanzanian unit had assets worth Sh6.13 billion and liabilities of Sh5.16 billion, giving it a book value of Sh969 million at the end of December 2023.
The other 40 percent stake in Heritage Insurance Company Tanzania is held by Mac Group Tanzania Limited, a local investment company with interests in shipping, real estate, manufacturing as well as oil and gas.
The sale of the Tanzanian unit will leave Liberty Kenya with Liberty Life Assurance Kenya Limited, Heritage Insurance Company Kenya Limited and CFC Investment Limited—all which it owns 100 percent.
Heritage Tanzania was established in the aftermath if Tanzania’s liberalisation of its short-term insurance market in 1998, opening the way for Kenya’s insurers like Britam, ICEA Lion and UAP to open shop in the neighbouring country.
It is not clear why Liberty is exiting Tanzania, whose insurance penetration has remained stagnant at less than one percent compared to Kenya’s 2.3 percent.
“There was a notable increase in insurance service expense, driven by significant growth in reported claims in Tanzania due to a large claim emanating from the mining sector,” said the firm in the annual report.
“In Tanzania, the business reported a large mining-related claim estimated at Sh4 billion (gross), which is almost 100 percent covered by first class reinsurance. The above claim was fully accrued in the 2023 financial statements.”
Tanzania has huge deposits of minerals such as gold, copper, silver and platinum—which have attracted major foreign-owned mining companies, including Barrick Gold Corp, AngloGold Ashanti and Petra Diamonds.
Net profit in the Tanzanian unit fell by 63.5 percent to Sh40.94 million in the financial year ended December 2023 from Sh112.2 million a year earlier, highlighting the impact of increased claims.
The Tanzanian operations are relatively smaller than Kenya’s, which posted Sh631 million net profit, indicating that Heritage Insurance contributed six percent of the group’s bottom line.
The Liberty deal will become the latest in Kenya’s insurance sector. NCBA Group this year announced it had fully acquired AIG insurance through purchase of additional stake. It previously held a 33.33 percent stake.
