Metropolitan, Cannon seals acquisition deal
SOUTH African financial services group MMI Holdings has acquired a controlling stake in Kenya’s Cannon Assurance, kicking off an expected series of mergers and acquisitions anticipated in the industry this year.
Under the deal, MMI’s subsidiary in Kenya, Metropolitan Life, will own 66 per cent of Cannon Assurance in a merger to be known as Metropolitan Cannon.
The Cannon stake cost MMI Sh2.4 billion, it said yesterday, part of which was settled through a share-swap.
Metropolitan will handle the long-term insurance business of the new composite underwriter, while Cannon will undertake general insurance, which focuses on short-term business such as motor, home and work injury policies.
“The board changes are not too many… and there are also minimal changes in human resources,” said Cannon Assurance chairman Inderjit Talwar.
Last month, the Insurance Regulatory Authority told the Star that the sector will record some abrasive acquisitions this year owing to cut-throat competition among underwriters, which is pushing most players to seek war chests through sale of stakes.
Low penetration of insurance in the Kenyan market, at slightly over three per cent, also presents a compelling business case for new investors as potential customers remain unreached, according to IRA.
Cannon has over the last few years held a market share of less than two per cent in an industry with 43 insurers, according to data from the Association of Kenya Insurers.