Mergers and acquisitions have dominated Uganda’s financial services industry in the last two years as companies look for ways to ensure better returns for shareholders.
In recent weeks, the entire insurance market was catching wind of South Africa-based financial services firm, Sanlam Emerging Markets (pty) Limited moving to integrate Lion Assurance Company (LAC) into their operations and dominate the Ugandan market.
This has happened for an initial purchase price of $6.5 million and only accelerated the industry consolidation that has been going on for years under the watch of Insurance Regulatory Authority (IRA).
IRA says it increased the minimum paid-up capital requirements for insurance players in order to create a strong industry that is capable of insuring all kinds of risks thus the mergers.
Going forward, Lion Assurance will renew all existing client polices under the Sanlam brand and the new owners will administer claims, organize any changes to existing policies and provide cover for any new requirements that existing LAC clients may have, disclosed Mr. Junior Ngulube, Sanlam’s Uganda CEO.
Mr. Ngulube said: “This acquisition gives us the scale that we need in an important market like Uganda. We had interests in the Holding company of Lion Assurance, is it was rather in good business interests to conclude the acquisition.”
It should be noted that Sanlam acquired 50.3 per cent stake in Niko Insurance Uganda about three years ago which brought positive contributions, increasing returns for them through creating synergies to ease operations.
In January, just two months after taking over former America International Group (AIG) Uganda agents, Lion Assurance wrote sh5 billion worth of premiums from the former’s clients. AIG had been one of the four big general insurers in the Ugandan market before exit at towards the end of 2016.
Lion Assurance chairman, Godfrey Kavuma was not available for a comment but Sanlam representatives said their new board would also accomadate former LAC boss and they will also retain most of the staff.