- APA says the deal offers an opportunity for the insurer to enter the Uganda, Tanzania, and Ethiopia markets.
- The Kenya-headquartered APA says the move provides it with new expertise in classes of business such as motor, engineering, and marine insurance.
- Hollard becomes the second international investor in APA Insurance, following Swiss Re, which acquired a stake in 2014.
South Africa-based insurer Hollard International has extended its footprint into East Africa. Hollard, a privately owned insurance, has struck a deal to acquire a stake in Apollo Investments Limited, the parent company of Kenya-headquartered APA Insurance.
This strategic investment, subject to regulatory approvals, gives Hollard International a presence in the East African market. The new acquisition supplements its existing operations in Southern and West Africa. Once approved, Hollard will become the second international investor in APA Insurance, following Swiss Re, which acquired a stake in 2014.
Hollard International deal opens opportunities for APA
For APA, the partnership gives Kenya’s second-largest insurer access to a larger market and expanded opportunities for growth.
“It’s an exciting time for APA because the Hollard International partnership will open new doors and new avenues of growth for our business,” said Ashok Shah, Group CEO of Apollo Investments Limited.
“We’ll have access to substantial new expertise in classes of business such as motor, engineering, marine, and other specialist lines of insurance – which we believe will open up a number of profitable business opportunities.”
Kenya’s insurance market boasts a competitive landscape, featuring roughly 58 insurers and reinsurers. The market’s prominent players include CIC, Jubilee, Britam, ICEA, Lion General, and APA Insurance, which was established in 1977. Notably, general insurance holds the lion’s share of the industry, accounting for 60 per cent of the gross written premiums.
Explaining the significance of the partnership, Shah notes, “In addition to expanding our operations in Kenya, this venture will also enable us to strengthen our foothold in Uganda and Tanzania. Moreover, it positions us favorably to seize opportunities in the Ethiopian market once it becomes accessible.”
Pravin Kalpagé, CEO of Hollard International, termed the deal “a vote of confidence in the Kenyan and East African markets.”
He says, “Hollard International has been looking for an East African partner for some time, and APA ticked so many boxes – it has an established track record, an impressive value proposition with strong broker and customer relationships, and it shares our values around community, reliability, and customer-centricity. All these elements resonated strongly with us.
“This investment continues Hollard International’s African model of finding strong local businesses and management teams with whom to partner in-country, rather than parachuting expatriates into a new market.”
Hollard International eyes the West African market
He adds that exploring options in Francophone West Africa is next on Hollard International’s to-do list.
What’s more, Kalpagé offered to bring Hollard International’s model of “impact beyond insurance” to the East African market. This model is already a success story in Mozambique and Ghana, among other countries.
Hollard Mozambique has developed risk-mitigation insurance products to protect smallholder and subsistence farmers. It cushions the livelihoods of people who are totally reliant on their crops from extreme weather events. The cover is rolled out through a partnership with local seed providers in Mozambique.
In Ghana, the MeBanbo microinsurance product arose from a partnership between Hollard Life, Vodafone Ghana, and Sasai Fintech, a business of Cassava Technologies. It offers accessible, affordable life insurance coverage via an end-to-end digital platform to the underserved Ghanaian market.
“This focus on being a catalyst for social impact in Africa is in line with Hollard’s business purpose, which is to enable more people to create and secure a better future,” concludes Kalpagé.
APA Insurance portfolio
In South Africa, Hollard is the largest privately-owned insurance group, offering both life and non-life product suites. Hollard International extends insurance solutions outside of South Africa. The insurer has a presence in Namibia, Mozambique, Zambia, Lesotho, Botswana, and Ghana. APA transaction will see the firm grow into Kenya and potentially into Uganda and Tanzania.
As per advisory firm KPMG‘s data, Kenya has a low insurance penetration rate of three per cent. Across the continent, South Africa stands out as the leader, with a significantly higher penetration rate of 17 per cent. The underlying cause of Kenya’s low penetration rate is primarily a perception among the majority of its population. A majority of people view insurance as a discretionary, easily dispensable service rather than an essential necessity.