The Insurance Regulatory Authority (IRA) and Kenya Re are at odds over a filing that shows the reinsurer bought a KSh3.39 billion stake in Athi River Mining (ARM) Cement.
The filing covers the six months to June and lists Kenya Re as having purchased additional shares in ARM Cement, a Nairobi Securities Exchange-listed company that entered liquidation in October 2021. Kenya Re denied the transaction, with Nicodemus Gekone, head of property and investments, telling Business Daily that the reinsurer had not acquired any ARM Cement shares and that it would write to the regulator.
IRA chief executive Godfrey Kiptum responded that the filing reflects what the regulator received, saying “That is how it is. It is what they filed with us. Whose report is it? It is my [IRA] report, and I am the one telling you so. Let them deny.”
ARM Cement was suspended from trading on the Nairobi bourse in 2018, placed under administration and later had its assets sold to National Cement Company for KSh5.05 billion. The former second-largest cement maker had been placed in administration by creditors, including local commercial banks, over a KSh20 billion debt.
IRA’s data show that the insurance industry’s exposure to NSE-listed firms rose to KSh56.48 billion at the end of June from KSh30.57 billion in the comparable period last year, lifting the share of quoted shares in total investments to a four-year high of 3.4 per cent from 2.2 per cent, with reinsurance exposure at 6.1 per cent.
Life insurers drove most of the increase, raising their holdings to KSh43.53 billion from KSh25.35 billion a year earlier. ICEA Lion Life’s investment grew by KSh5.2 billion to KSh14.55 billion, Jubilee Life added KSh4.66 billion to reach KSh9.93 billion and Britam Life increased by KSh3.92 billion to KSh6.39 billion, together accounting for 75.3 per cent of the overall growth in quoted shares.
IRA also noted that holdings of shares of reinsurers in NSE-listed companies grew from KSh1.35 billion to KSh6.32 billion, citing the disputed ARM Cement investment as a contributor to that rise. The regulator said the information was extracted from quarterly unaudited returns submitted under Section 54 of the Insurance Act without adjustments unless consulted with the insurer or reinsurer.
Kenya Re is 60 per cent government-owned and is among the cash-rich firms that pay regular dividends to the state. Fund managers have listed Kenya Re among state parastatals that were pressured by the government to buy into the Kenya Pipeline Company IPO in the first quarter of the year.
