KENYA — NCBA Group, a financial services conglomerate, has acquired insurer AIG Kenya from American International Group Inc. for an undisclosed amount.

For the past 18 years, NCBA Group, Kenya’s fourth-biggest bank by market capitalization, has held a minority share in the Kenyan subsidiary of insurer American International Group (AIG) Inc. Now, the lender has a bigger share of the pie.

The lender finalized a 66.67% buyout deal that will give it full control of AIG Kenya, which controls 2.14% of Kenya’s insurance market, it said in a statement. 

The acquisition puts the lender on track to its ambitious expansion drive to become a “universal bank” that provides customers with all their financial needs, managing director John Gachoras said.

With the buyout, NCBA is eyeing a larger share of Kenya’s US$2.3 billion (KES300 billion) insurance industry. The acquisition comes when Kenyan lenders have been moving into insurance to seize opportunities from low insurance penetration. 

With insurance increasingly becoming a basic financial need for the type of customers we serve, an ecosystem of NCBA’s physical and digital distribution platforms and AIG Kenya’s insurance capabilities will unlock opportunities to catalyze deeper insurance market penetration in Kenya and the East Africa region,” said Gachora. 

AIG Kenya joins six other NCBA Group subsidiaries – NCBA Investment Bank, NCBA Leasing LLP, NCBA Bancassurance Intermediary Ltd, NCBA Bank Uganda, NCBA Bank Tanzania, and NCBA Bank Rwanda.

Kenya’s insurance penetration is 3%, the fourth highest in Africa after South Africa (17%), Namibia (7.8%), and Morocco (3.9%). Insurance penetration in Africa’s economic powerhouses like Nigeria and Egypt trails their peers at 0.4% and 0.6%, respectively.

The insurance industry, with a Compound Annual Growth Rate of 10 percent, has a low penetration rate in Kenya, currently at 2.43 percent.

Banks in the country have been keen to tap the insurance market, with almost every lender currently offering bancassurance and major lenders going for stand-alone underwriting businesses through subsidiaries.

Apart from NCBA, Equity has also entered the insurance sector, having received approvals from the Insurance Regulatory Authority (IRA) to establish a general insurance company in May 2023.

The move into general insurance by banks will likely shake up the market with about 56 major players.

Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals and insights from Africa’s business, economy, and moreSUBSCRIBE HERE