Prudential to complete acquiring IAA Healthcare portfolio by May 08th 2021

Prudential Assurance Uganda Limited, come May 08^th 2021, will acquire all the medical insurance policies of International Air Ambulance (IAA).

IAA Healthcare was previously the largest Health Membership Organization (HMO) in Uganda with a portfolio of UGX31.7 billion at the end of 2020.

The deal, that is pending regulatory approval will see Prudential, which in 2020 jumped from the 6^th to the fourth-largest life insurance company, with a UGX55 billion portfolio, emerge as the largest life insurance company and possibly the fourth-largest insurance company overall in Uganda with a portfolio of over UGX80 billion in gross written premiums.

CEO East Africa Magazine has seen a formal communication by Andre Tait, the IAA Healthcare Chief Executive to stakeholders, confirming the merger and acquisition.

“This letter serves as a formal notification that the Board of International Air Ambulance (IAA) has decided to transfer its health insurance business to Prudential Assurance Limited (“PAUL”). For our policyholders, staff, health service providers and claimants, the consequence is that all active medical insurance policies with IAA will be transferred to PAUL on the 08^th May 2021, subject to the approval of the Insurance Regulatory Authority,” Tait wrote.

Tait assured all stakeholders of uninterrupted service saying the merger was in their best interests.

“All of IAA existing customers, will become part of one of the biggest insurers in the world, offering a wide range of benefits across the globe; all existing health service provider agreements will be transferred without interruption, meaning that claims management will continue as is,” he wrote.

He also said that “Prudential will continue to fulfil the contractual obligations” of all IAA contracts “on the same standards and terms” and that the service delivery standards would continue “uninterrupted as all IAA agents and staff will also be transferred” to Prudential.

He also said that IAA customers would continue to use existing IAA membership cards.

“I wish to assure you that the selection of the correct strategic partner, was of utmost importance to the board and be assured of the continued professional delivery of our service and benefits. IAA appreciates and values the business relationship that has developed with you over many years,” Tait reiterated.

As at end of 2020, according to provisional gross written premium figures published by the IRA, the four largest life insurance companies in order of size were UAP Old Mutual Life Assurance (UGX60 billion), Jubilee (UGX59.3 billion), ICEA Life (UGX58.2 billion) and Prudential (UGX55 billion).

A UGX80 billion Prudential, would see the company which entered Uganda in June 2015 via an acquisition of the life business of Goldstar Insurance, earn a place amongst the top 5 largest insurance companies, previously the preserve of the larger and more developed general insurance companies.

By end of 2020, Jubilee General Insurance had the largest portfolio- UGX162.4 billion, followed by UAP Old Mutual General, at UGX136.5 billion and Sanlam General at UGX75.5 billion. Britam was the 4th largest general insurance company, with UGX67 billion and ICEA was a distant 5th with UGX26.4 billion.

Launched in 2001, IAA Healthcare is part of the International Medical Group that also includes International Hospital Kampala (IHK), International Medical Centre (IMC), IMG Pharmaceuticals (IMGP) and the International Medical Foundation (IMF).  

However, a source familiar with the deal said that since the time Mauritius’ Ciel Healthcare acquired majority control in IMG in 2015, they have not been keen on keeping the insurance arm which is not their speciality but has also largely been struggling.

In total, the Ciel Group runs a network of five hospitals, two HMOs, three laboratories, nineteen clinics and twenty-four lab collection points in three countries in Africa.

The HMOs business in Uganda is generally not profitable. In 2019 and 2018, two of the most prominent players- AAR Health Services and IAA made losses. IAA Healthcare, according to official figures submitted to the regulator, made a UGX1.5bn loss in 2019 and a loss of UGX130.5 million in 2018.  

In an August 2020 interview with CEO East Africa, Alhaj Kaddunabbi Ibrahim Lubega, the Chief Executive Officer of the regulator, said that given the likely post-Covid-19 pressure on the industry, he wouldn’t be “surprised if there are some mergers and takeovers.”

“But these (mergers and takeovers) should be to a limited extent,” he said.