Competition Authority of Kenya approves sale of ICEA Lion shares

Competition Authority of Kenya Director General Wang'ombe Kariuki (PHOTO: Boniface Okendo)

The Competition Authority of Kenya has approved the proposed acquisition of shares of ICEA Lion Insurance Holdings Limited by Eastern Africa Holdings Limited (EAHL) unconditionally.

The proposed transaction involves the acquisition of 24.1 per cent of the issued shares with veto rights over certain decisions in ICEA Lion Insurance Holdings Limited by EAHL.

Eastern Africa Holdings Limited (EAHL) is incorporated in the United Kingdom and is fully-owned by Leapfrog Strategic African Investments (LSAI).

“The Competition Authority of Kenya has approved the proposed acquisition of shares, with veto rights, comprising 24.1 per cent of ICEA Lion Insurance Holdings Limited by Eastern Africa Holdings Limited unconditionally,” said CAK in its determination.

The ICEA Lion transaction will be the second investment by the LSAI fund, a US$350mn separate managed fund established in 2016 by the two firms with plans for investments in Africa, particularly Kenya, Ghana, and Nigeria. The first investment of LSAI was an investment into the Enterprise Group Limited in Ghana which was concluded in August 2017.

Leapfrog in July last year also announced it had entered into an agreement with ICEAL Lion for the acquisition of the 24 per cent stake subject to regulatory approvals and other conditions precedent.

The private equity firm then noted that the partnership would support the ICEA Lion’s strategy of focusing on customer connectivity, growth and innovation, digitisation, development of new products and enhancement of operating synergies throughout its various operations.

In its determination, CAK noted that that the transaction would not have the impact of increasing ICEA Lion’s market shares across the different insurance industry segment and hence the reason it approved it unconditionally.

Analysis by CAK shows that ICEA was the third-largest player in the life insurance market with a market share of 13.86 per cent, 4.36 per cent in general life, and four per cent in assets and fund management.

Data from the Insurance Regulatory Authority (IRA) shows that there were53 registered insurance companies in Kenya as of the end of December 2018. 28 of them were in general insurance, 16were long-term insurers, while 9 were composite insurers, offering both life and non-life insurance.

The IRA report indicated that the top ten players in the general insurance market, and their market shares based on gross written premiums, were: Jubilee (8.60 per cent); CIC General (7.91 per cent); APA (7.50 per cent); UAP (7.18 per cent); Britam General (6.31 per cent); GA Insurance (4.69 per cent); Resolution Insurance (4.47 per cent); AAR Insurance Kenya (4.40 per cent); ICEA Lion (4.36 per cent); and Heritage (4.21 per cent).

“Post-merger, the merged entity’s combined market share in the market for general insurance market will not change from the current4.36 per cent. The proposed transaction is unlikely to raise competition concerns since the market share is low. Further, the merged entity will face competition from the other players in the market.”