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Life insurance catches on- 5 years after split of life and non-life businesses

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Left - Right, Zephania Dube Chief Operations Officer, Arjun Mallik, Managing Director East Africa and Nashiba Nalubega, Marketing and Communications Manager of Prudential Uganda at a press conference to announce a bonus that was accredited to Prudential clients' Policies. This was at a Press conference held in Kampala on 7th May 2019 at Golden Tulip. Prudential, is one of the latest players in the life business, after it acquired Goldstar Insurance’s life arm in 2016.

Nine Life Assurance Companies, in 2018 underwrote UGX216.88 billion, nearly 4 times the amount of business the sub-sector underwrote in 2013- a year before the regulator took a strategic decision to separate life and non-life insurance businesses, in September 2014.

Since then the life business, as it is known has grown by leaps and bounds, attracting 3 new regional and global players and raking up more premiums.

Life insurance gross written premiums grew by 28.69%, from UGX168.53 in 2017 to UGX216.88 billion in 2018. The previous year, it grew by 27.19% from UGX132.5 billion.

Distribution of Gross Written Premium Income (2017-2018)

By comparison, the entire insurance industry grew by 17.51% in 2018 and 14.75% the year before that. In fact, in 2018 life insurance outgrew entire industry for the 5th straight year.

Non-life insurance business income grew by 12.36% from Shs507.2bn in 2017 to Shs570bn in 2018, While Health Membership Organisations (HMO’s) grew by 31.25 % from Shs52.7bn in 2017 to Shs69.1bn in 2018.  

Consequently, life’s industry contribution has consistently risen from 12% in 2013, growing year on year to 25.3% in 2018, eating into both into HMOs and non-life.

As a result, non-life insurance contribution to the entire sector has reduced from 76% in 2015 to 66.6% while HMOs has reduced from 12% in 2013 to 8.1% in 2018. Medical Insurance is a major component of life insurance- accounting for 14% in 2017- UGX24bn of the UGX169bn life premiums went to medical insurance.

Key Insurance Industry Trends according to IRA

Life insurance is composed of 4 major products: life individual- the most dominant, followed by life group, medical insurance and Deposit Administration Plan (DAP).

Who are the leading players in life insurance?

The Life assurance business is a fairly balanced with the top 5 out of 9 companies holding significant portfolios all running neck to neck.

UAP Life Assurance, the industry leader with a 22% market share, grew premiums written by 8.25% from UGX44.13 billion in 2018 to UGX47.77 billion in 2017.

UAP Life Assurance’s Sales Manager- Corporate Allan Lwanga cutting cake with pupils of Mother Manjeeri primary school in Kirinya, Bweyogerere to mark the launch of UAP Somesa Plus Schools Product. Innovations and the entry of new players, coupled with favourable regulatory policies have spurred growth in the life business that now accounts for 25% of the insurance industry.

Liberty Life Assurance, although it posted a 5.54% decline in premiums- from UGX37.56 billion to UGX35.48 billion, it remained the second biggest life assurance company with a market share of 16.36%.

Sanlam Life in the 3rd position and a market share of 16.22%, increased their premiums by a whopping 41.86% from UGX24.8 billion to UGX35.18 billion- just a few million behind Liberty Life.

ICEA Life Assurance, in the 4th position and with 15.4% market share grew their premiums by 21%, from UGX27.59 billion to UGX33.38 billion.

Jubilee Insurance grew by 27.73% from UGX21.66 billion to UGX27.66 billion and occupies the 5th place.

Prudential Assurance, which in June 2015 acquired the life business of Goldstar Insurance, registered a 190.49% growth in premiums, nearly tripling the UGX6.96 billion premiums in 2017 to UGX20.24 billion.

New players, CIC Life which entered the Uganda Market in 2014 and Metropolitan Life which entered Uganda in 2017 are in the 7th and 8th positions.

CIC Life in grew picked up UGX9.9 billion in premiums while Metropolitan picked up UGX5.17 billion. NIC Life is in the last position with just UGX2 billion in 2018 premiums.

Liberty Life to pull out of Uganda

Liberty Holdings, the parent company of Liberty Life has indicated, it is exiting Uganda this year over what it calls “mixed results” over the years, “impacted by sub-optimal scale across most product offerings” as well as high operational risks relative to potential returns and market challenges that among others included competitor practices and immature product categories.

Liberty has also indicated it is leaving Malawi and Tanzania over the same reasons.

The Liberty Group, a South African insurance firm, has put on sale its Kenyan investment advisory business, Stanlib, which has Sh135 billion worth of assets under its management. Liberty Holdings in Uganda, other than Liberty Life Assurance also owns Stanlib Uganda- which will also be sold.

Projections for 2019 look even rosier, if Q1 industry figures are to go by. Premiums for Q1 grew by 30.71% from UGX48.53 billion in Q1, 2018 to UGX63.43 billion in Q1, 2019. The industry on the other hand registered a 9.1% growth. Total industry premiums grew from UGX260.5 billion in Q1, 2018 to UGX284.12 billion in Q1, 2019.

  • Left - Right, Zephania Dube Chief Operations Officer, Arjun Mallik, Managing Director East Africa and Nashiba Nalubega, Marketing and Communications Manager of Prudential Uganda display a snapper frame with the amount of bonus that was accredited to Prudential clients' Policies at a Press conference held in Kampala on 7th May 2019 at Golden Tulip.

  • Left - Right, Zephania Dube Chief Operations Officer, Arjun Mallik, Managing Director East Africa and Nashiba Nalubega, Marketing and Communications Manager of Prudential Uganda at a press conference to announce a bonus that was accredited to Prudential clients' Policies. This was at a Press conference held in Kampala on 7th May 2019 at Golden Tulip. Prudential, is one of the latest players in the life business, after it acquired Goldstar Insurance’s life arm in 2016.

  • The insurance industry in Uganda in a snapshot. The industry is top-heavy with just 3 of 21 insurance firms - Jubilee, UAP and Sanlam controlling over 60% of the market

Kyamutetera is a senior journalist based in Kampala

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Finance

Kwame Ejalu’s Kent Holdings, acquires Alexander Forbes’ Ugandan unit; rebrands to Zamara

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Zamara Group’s logo; now the new face of Alexander Forbes Uganda, who have rebranded into Zamara Uganda

Alexander Forbes Financial Services Uganda Limited is now Zamara Actuaries, Administrators and Consultants (U) Limited.

This follows the ongoing exit of the South African financial services group from Uganda and the sale of their 51% stake in Uganda to Kent Holdings Limited- a Ugandan financial services group with interests in insurance brokerage and pensions management.

The two companies affirmed the sale, in a joint statement on August 21st, by Bonga Mokoena the Alexander Forbes Emerging Markets (AFEM) Chief Executive Officer and Kwame Ejalu, the Kent Holdings Limited Chairman.

Kwame Ejalu, the Kent Holdings Limited Chairman wields a rich experience in Uganda’s financial services industry. The Kent/Zamara partnership blends Kent Holdings’ 22 years of local experience and strategic leadership with Zamara’s 23-year African heritage and technical capacity

“Alexander Forbes Emerging Markets (AFEM) and Kent Holdings are pleased to announce that an agreement has been reached on a sale of shares to Kent Holdings Limited. On 2 July 2019, a sale of shares agreement was executed in terms of which, AFEM sold 51% in Alexander Forbes Financial Services Uganda Limited, to Kent Holdings Limited, a co-shareholder in Alexander Forbes Financial Services Uganda Limited,” read the statement.

Kent Holdings, previously owned 49% of the Ugandan operations.  

The statement however said that “the sale of shares agreement is subject to fulfilment of conditions precedent.”

“The terms and conditions of the sale agreement remain confidential,” both executives announced, but confirmed that Alexander Forbes has effected a name change and will now be known as Zamara Actuaries Administrators and Consultants (Uganda) Limited.

The name change was gazetted on 17th July 2019.

“Alexander Forbes Financial Services (Uganda) Limited, has been by a special resolution passed on 10th July 2019 and with the approval of the registrar of companies changed its name to Zamara Actuaries Administrators and Consultants Limited- 17th July 2019,” reads General Notice No. 762 of 2019, extracted from the Gazette.

Miriam Ekirapa Musaali, the Zamara Uganda Chief Operating Officer. She possesses over 11 years in Uganda’s capital markets industry- where she rose to the Director Market Supervision role at Uganda’s capital markets regulator – Capital Markets Authority, from whence she became the Alexander Forbes Uganda (Now Zamara Uganda) COO and Head of Business for slightly for slightly over 2 years. She says, the name change shall not in any way impede the quality of service as the team remains the same “enthusiastic, energetic, creative” team.

In a separate announcement, media announcement run in the local dailies, Zamara also confirmed their entry into the Ugandan market, promising that they called “fresh perspective in the delivery of financial services in Africa.”

Who is Zamara?

According to their media announcement, the Zamara Group is a specialised financial services group providing actuarial advice and retirement administration solutions in financial services, umbrella retirement solutions, investment and risk sectors to individuals, corporates, parastatals and retirement fund clients. 

The firm currently administers assets in excess of KSh. 280 billion an equivalent of UGX 9.995 trillion and is the only actuarial, consulting, accounting and pension administration firm in Kenya to be ISO 9001:2015 certified.

Zamara Group Executive Director , James Olubayi

Uganda is the sixth Zamara operation after Kenya, Nigeria, Rwanda, Tanzania and Malawi. Zamara started operations in Kenya over 23 years ago as Hymans Robertson and later changed to Alexander Forbes (East Africa) Limited before renaming to Zamara Actuaries, Administrators and Consultants Limited, following the exit of Alexander Forbes from the Kenyan market in 2017.

For four consecutive years, Zamara, their umbrella fund, the Zamara Fanaka Retirement Fund (formerly Alexander Forbes Retirement Fund) and Zamara Vuna Pension Plan (formerly Alexander Forbes Vuna Pension Plan), Zamara’s individual pension plan have been variously awarded in Kenya’s Think Business Awards.  

A brand that embodies a fresh perspective on the delivery of financial services

Commenting on the entry of Zamara into Uganda, Kwame Ejalu, the Kent Holdings Chairman said: “We are enthusiastic about this partnership between Kent Holdings and Zamara Group as it marks the entry into Uganda, of a formidable brand that embodies a fresh perspective on the delivery of financial services in Africa. This partnership blends Kent Holdings’ 22 years of local experience and strategic leadership with Zamara’s 23-year African heritage and technical capacity, to deliver innovative and excellent services to our clients, underpinned by simplicity, empathy and trust,” adding: “Zamara Uganda will now add to our portfolio pan-African expertise, actuarial services and other online solutions that we previously did not offer.”

Asked if Zamara had acquired the stake, previously held by Alexander Forbes, he said he would comment on this after “the Alexander Forbes-Kent Holdings transaction is fully complete and all conditions precedent are fulfilled.”

Ejalu however said that Zamara Uganda inherits and will continue to run a managed private pension funds sector in Uganda and managed assets under administration portfolio in excess of UGX380 billion- roughtly 40% sector market share.

James Olubayi, the Zamara Group Executive Director said that the Zamara Group looked at Uganda as “one of the key strategic regions in the market for growth of the group.”

“Zamara aims to elevate the quality of advice and solutions offered to stakeholders and inevitably be a game changer for clients it serves in Uganda. We look forward to the extended partnership with Kent Holdings, clients, stakeholders across Africa,” he said.

Miriam Ekirapa Musaali, Chief Operating Officer, Zamara Uganda who previously was the Alexander Forbes COO said “We remain the same enthusiastic, energetic, creative team that is committed to serving our clients in Uganda. We will no doubt continue to offer superior consulting, advisory and administration services to pension funds in Uganda and further enhance our offering and advice to truly world class levels.”  

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Finance

Stanbic Bank scoops June/July best gov’t securities dealer award

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The Governor Prof. Emmanuel Tumusiime-Mutebile has given an award to Stanbic Bank Uganda (LTD) for being the best performing bank in dealing government securities for the months of June and July 2019. The award was received by Stanbic Bank CEO Mr. Patrick Mweheire during the quarterly Uganda Bankers Association (UBA) meeting at BoU headquarters in Kampala.

Governor BOU Prof. Emmanuel Mutebile(L) and Patrick Mweheire(R), CEO Stanbic Bank Uganda(LTD) at the do

The bank has been recognised by the regulator for its role in the primary dealer system that helps in developing Financial Markets and in reducing the costs associated with issuing Government Securities; through increasing demand, market efficiency, encouraging secondary market trading and improving the quality of Financial Market information.

A primary dealer is a pre-approved bank, broker or financial institution that is able to lend money to the government through treasury bonds and treasury bills. 

Background information on best performing banks in government securities award

In January 2005, the Bank of Uganda initiated the “Award for the Best Performing Primary Dealer in Uganda Government Securities for the Month” to recognize the Primary Dealer that performed best in trading Uganda Government Securities and transmitting information regarding the status of the financial markets to the Central Bank.

A Primary Dealer is any financial intermediary that has signed a Memorandum of Understanding with the Bank of Uganda to execute the following actions on a consistent basis:

§ To participate as counter-party in Uganda Government securities auctions conducted by the Bank of Uganda.
§ To provide the public with prices or yields that they will buy and sell “On-the Run” (the most recently auctioned) Uganda Government securities. i.e. Treasury bills and Treasury bonds on a continuous basis.
§ To provide the public with prices or yields that they will buy Off-the-Run (Other than the most recently auctioned) Uganda Government securities on a continuous basis.
§ To trade with the public Uganda Government securities at the prices or yields that they have quoted.
§ To make available information on the status of the market to the Bank of Uganda on a timely basis.

The points allocated for the Award to the Best Performing Primary Dealer in Uganda Government Securities for the Month are aggregated to determine the winner of the prestigious award.

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dfcu Bank’s H1 profit declines by 14% to UGX35.7 billion

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Interim H1 2019 results for dfcu Bank HY are out, indicating a 14.3% decline in net profit to UGX35.7 billion down from UGX41.6 billion in the same period in 2018.

Deposits declined by 1.5% from UGX2.02 trillion to UGX1.99 trillion while lending went down by 3.8% from UGX1.4 trillion to UGX1.36 trillion.

As a result, the bank’s asset book declined by 2.7% from UGX3.03 trillion to UGX2.95 trillion.

This is the first 6 months of new Managing Director’ Mathias Katamba’s firm grip on the bank, since he assumed full reigns in January this year.

However, compared to December 2018, there was a slight 1.3% growth in assets from UGX2.91 trillion to UGX2.95 trillion. Deposits also registered a slight 0.6% rise to UGX2.02 trillion, from UGX1.97 trillion.

dfcu yet to recover from 2018

dfcu bank, now Uganda’s fourth largest bank with about 10% of industry assets is yet to recover from what analysts say was a hard 2018.

Customer deposits largely remained flat, declining 0.4% from UGX1.99 trillion to UGX1.98 trillion. Lending went down 4.8% from UGX1.33 trillion to UGX1.4 trillion.

Full year profits took a 51.6% hit, reducing from UGX127.6 billion to UGX61.7 billion.

Assets declined 4.7% from UGX3.03 trillion to UGX2.89 trillion.

dfcu’s not-so rosy performance, has had an impact on its share price. Share price rose from UGX681 at the beginning of January 2018, rising 42.4% to hit a climax of UGX970 on 17th July 2018 but closed December 2018 at UGX822.97- a reduction of 15%.

Since the year began, dfcu share price has continued in a free-fall, dropping a further 21%, to UGX650 as of today, August 22nd 2019.   

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