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Ashok Shah, CEO, APA Insurance. Photo/LIZ MUTHONI
Listed underwriter Pan Africa Insurance Holdings has opened talks with Apollo Insurance to dispose of its stake in APA Insurance, a joint venture they co-own.
People familiar with the transaction, said Pan Africa, which is half-owned by a South African firm, Sanlam, wants to sell its 40 per cent stake in APA Insurance – a move that would leave the insurer fully in the hands of Apollo.
Apollo has owned the balance 60 per cent of PA for the past nine years making the transaction one of the most important ownership shifts in the insurance industry.
Pan Africa wants to spin off its general division that merged with Apollo’s short-term business to create APA, in 2003.
APA Insurance had gross premiums of Sh3.6 billion at the end of 2009 and was the second largest non-life underwriter, after Jubilee, with a market share of 8.43 per cent, according to AKI records.
Pan Africa and Apollo are said to have opened the talks at the beginning of the month but have yet to seek regulatory approvals that is needed to close the deal.
Pan Africa is a listed firm, whose activities are closely monitored by the Capital Markets Authority (CMA) and both partners in the deal are regulated by the Insurance Regulatory Authority (IRA).
On Tuesday, CMA said it was yet to receive any request for approval but noted its role in the matter was limited.
“The role of the Capital Markets Authority is to approve the shareholders circular that must be issued prior to any meeting called to consider such a transaction,” said CMA chief executive Stella Kilonzo.
Shareholders in both companies must approve of the sale at a special general meeting or an annual general meeting.
APA managing director Ashok Shah and his Pan Africa counterpart Tom Gitogo declined to comment on the matter.
The two insurers (Apollo and Pan Africa) have been refining their strategies in a fast changing market with Apollo likely to focus more on general insurance as Pan African concentrates on the life insurance business.
To long-term watchers of the insurance industry, Pan Africa’s departure from the APA marriage does not come as a surprise.
Since the South Africans bought a stake in the firm in 2000, it was clear that their interest was in the life business.
In 2005, Sanlam acquired African Life Assurance (then owning the Kenyan firm) and a controlling interest in Channel Life.