Insurance companies investing in government securities

The Ugandan Insurance industry is still in the infancy stages, despite the fact that some insurance companies have been in operation for over 30 years. With currently 28 insurance companies in operation and but uptake estimated at 0.85%, you can ignore the competition between players.


However, the 2014 preliminary results show mixed fortunes for the players. Some players made huge profits, while others posted slightly lower profits compared to previous year. Others were unlucky, posted big losses. However, the good news for the industry is that overall, it grew at 13% in 2014 up from 15% the previous year.

The Insurers total Asset base rose to Ugx. 915 bn from Ugx. 754 Bn In 2013. The net claims incurred for both life and Non-Life insurance increased by 10.7% from Ugx. 85.5 bn to Ugx. 101.3bn in 2014. For whole of 2014, the industry realized a Gross Written Premium of Ugx 495.9 bn up from Ugx. 663 bn in 2013-representing 6.9% growth.

However, over 65% of market is commanded by four players-Jubilee, UAP, AIG and Liberty Life Assurance and Lion Assurance. This leaves a paltry 25% for the 23 players. The 2014 report by Insurers Association of Uganda findings are shocking: market share as percentage of premium reveals Jubilee tops with 19.20%, UAP insurance follows with 15.71%, AIG Uganda 9.38% Liberty Life Assurance 5.88% and Lion Assurance with 5.13%.

From the bottom, Nova Insurance holds 0.26%, Leads 0.55%, PAX 0.76%, NIC General 1.90%, and First Insurance 0.93%

In non Life Insurance, Jubilee leads with 23%, followed by UAP Insurance with 19%, AIG Uganda with 11.16% and Lion Assurance with 6.10% in that order. In this category, from the bottom, NOVA Insurance trails with 0.31%, Rio Insurance 0.42%, Leads 0.65%.

The Insurance Regulatory Authority preliminary report attributed the decline in performance to the changes in the operating environment that directly impacted on the insurance business.

However, these changes did not deter some players from posting favourable results. This growth can be argued to arise from a change in the game plan from the traditional line of business, government securities. With favourable rates, the trend observed was that most firms earned more from the lucrative government securities than the traditional Commission income.

Jubilee Insurance

The Kenyan Based Insurer proved that they are indeed the best in East Africa and are not about to lose that position soon. Gross premium written increased from Ugx. 87 bn to Ugx. 89 bn in 2014. Commission earned increased from Ugx.11.2 bn in 2013 to Ugx. 11.9bn in 2014. At the end of year, net profit of Ugx. 13bn was declared up from 11.6bn previous year. Total capital and reserves increased from Ugx. 38bn to Ugx. 40bn.

Analysts attribute Jubilee’s success to the Agha Khan’s booming businesses in Uganda. Such businesses include Monitor Publications Limited, NTV, Bujagali Enterprises, Diamond Trust Bank, the Agha Khan schools and many others. These all insure with Jubilee, giving it the perfect head start. Beyond that, Jubilee is said to be very aggressive in the market. The firm has introduced market driven products, properly segmented market and most importantly quick settlement of claims.

It’s therefore not surprising that they won the 2014 Claims Handling and Settlement Award by Uganda Association of Insurance Brokers

According UIA report 2014: When asked (respondents) which Insurance companies they would choose to use in future (high value respondents) 36% of them chose Jubilee.

Enter UAP

UAP maintained her second place. Gross premiums written increased from Ugx. 62.3bn to Ugx. 77.2 billion In 2014

Total assets jumped to reach Ugx. 122bn up from Ugx. 95 billion in 2013. This was boosted by her new born baby- Nakawa Business Park which has attracted corporate companies including URA. From investment in property, UAP earned Ugx. 21 bn up from 18.7bn in 2013.

Investment in government securities, bonds etc yielded Ugx. 27bn up from Ugx. 17bn in 2013. And from commission income, firm earned Ugx. 4.1 bn up from Ugx. 2.8bn.

UAP continued success is also attributed to its aggressiveness in the market and performance rewards to outstanding employees.

Last month, four UAP risk advisors were awarded for their outstanding performance in 2014 with all an expense paid trip for one week holiday in Zanzibar. The firm also launched UAP life assurance reward. The winners will be flown for the International Convention in Dubai.

UAP is also among top firms paying highest commissions to agents: range of 40 to 45. Such commissions attract and encourage agents to work hard. Such results have seen the commissions paid increase from Ugx. 17bn to 29bn in 2014.


Fortunes were not so good for AIG, despite posting net profit. It is no secret that AIG had a tough year 2014. Gross premium written declined from Ugx. 50bn in 2013 to Ugx. 42 bn in 2014. The company attributed the decline to ‘‘strategic review of key insurance products.’’ The profits were affected by management expenses, which doubled from Ugx. 7bn to Ugx. 14bn in 2014, thus the expense ratio increased by 19% from 35% to 54%. The firm is said to be surviving on commissions from Many Donor NGOs and European based organizations working here.. The firm’s value of government securities held to maturity increased from Ugx. 19bn to Ugx. 27bn in 2014. Commission income increased marginally from Ugx. 4.7bn to 4.9bn in 2014.

Jubilee, UAP watch out for Britam

And the award of best performer goes to Britam. When Mr. Allan Mafabi crossed from UAP to Britam as CEO, we predicted he would turn around Britam and that’s exactly what happened.

Armed with successful strategies from UAP, where he was the General Manager, Business Development, Mafabi did not disappoint his bosses in his first year at Britam. Mafabi turned around the firm from a net loss of Ugx. 1.9bn in 2013 to net profit of Ugx. 1.6bn. That is not all. Gross Premiums written increased from Ugx. 9bn to Ugx. 15bn. While total assets increased from Ugx. 17bn to Ugx 31bn, an 82% increment in the first year. Investment in government securities, bonds generated Ugx. 10.4 bn up from Ugx. 6.6 bn in 2013. Commission income increased from Ugx. 280m to Ugx. 1.9 billion, a 579% increase.

The firm was able to make these great strides thanks to aggressive team and guidance from top leadership. The CEO ,Mafabi, formerly the General Manager, Business Development at UAP Uganda commands a wealth of experience spanning over a decade in the insurance industry ranging from general insurance, Underwriting Management, Claims Management, loss adjustment, Reinsurance and Marketing.

The 2014 UIA report reveals more good news. Asked to name service provider (Insurance player) that guarantees satisfaction, Britam scored 100%. And when asked about brand name that meets their expectations, 75% of respondents said it was Britam.

In addition, Britam also taps from Kenyan companies operating in Uganda especially those that are insured with them in Kenya.

For his part Mafabi attributes the super growth to ‘ ‘ Technical expertise, very strong Reinsurance treaties, super claims services, excellent turnaround times that are over and above client expectations and invaluable human resource that makes it so easy to delight customers.’’

The company moves in 2015 with grand plans to get closer to clients through more regional centers and service centers country. Above all massive investment in ICT.

Lion Assurance on a mission

If there is one insurance firm, market leaders must watch closely is Lion Assurance. The firm seems to have a clear growth.

From their Nakasero head office, the firm’s Gross Premium rose from Ugx. 19bn to Ugx. 23.7 bn in 2014. Total assets increased from Ugx. 25bn in 2013 to Ugx. 29.4 bn in 2014.

Investment in shares rose to Ugx. 4.9bn up from Ugx. 3.8bn in 2013. From investment in fixed deposits with commercial banks, the firm earned Ugx 6.4bn up from Ugx. 4.6bn in 2013.

Income from commission on the other hand increased from Ugx. 2.2bn to Ugx 2.8 bn in 2014.

Lion’s growth is based on profes­sional and high standards, innovative products that are not only affordable but also market driven. Above all, providing for the mass market-they target all segments-from large corporate firm to SME’s, home solutions which cover both household content and family risks. Their attachment to Buganda Kingdom can also not be ignored.

Excel Insurance

Best known for third party policy, Excel Insurance, rose from as the ashes, from a loss of 32bn to post Ugx. 129 bn. Gross Premiums written increased from Ugx. 1obn to Ugx. 12.6bn in 2014. While total assets increased from Ugx. 9bn to Ugx. 10.3 bn in 2014.

The beauty with third party is that most people who apply for this policy, when they get accidents, they rarely follow up on the cover. Given the lengthy process of claiming their money. Instead, the parties choose to settle issues among themselves. Simply put, third party policy is free money for insurance firms. For example, out of Gross Premium of Ugx. 10bn, the firm only paid out (Net claims incurred) was only Ugx. 1.6bn, a lucrative area indeed

From investment in government securities and bonds, EXCEL Insurance earned Ugx. 2.7bn up from Ugx. 1.6 bn in 20143.

NIKO Insurance

NIKO’s partnership with Shell stations to sell third party policies is also beginning to pay off. Aware of the cash cow, UAP has also joined this booming trade. UAP recently signed agreements with all Shell, TOTAL, and other players to sell third party policy at their stations.

PAX insurance

New kid on the block, PAX recently joined Third Party trade. The insurance firms signed an agreement with struggling Petro city to sell her policies through all her stations across the country

The Catholic based insurance firm has registered some grown over the years but analysts think the firm has not fully exploited their potential-Catholic Church and her institutions.

A partnership with fast growing Centenary Bank would make wonders. The agreement would mean all Centenary bank borrowers are insured with PAX just like DTB does with Jubilee Insurance.

State Wide Insurance Company rides on Catholic Church

Owned by some of country’s seasoned businessmen, State Wide Insurance Company (SWICO) has managed to survive the test of time. As Ssebana Kizito gets weak due to old age, his partner Kiwanuka is playing a critical role to push business.

Given his close connection to the Catholic Church, many of Catholic Church projects are insured with SWICO. Kiwanuka is said to be present on nearly all church projects and con­tributing greatly. In this way, Catholic Church see SWICO as firm near to them.


Will NIKO-Sanlam alliance work out?

NIKO shareholders may need to recall the seasoned businessman Zaake to redirect their poor performing business. Zaake left NIKO insurance to concentrate on his A’ Plus Funeral service. A business that threatening rivals and taking market by storm.

For the second year in row, NIKO Insurance books of accounts have been in red. From a net loss of Ugx. 1.7bn in 2013. NIKO yet again went under with net loss of Ugx.1.03 bn.

The change of top leadership is said to have disorganized the once vibrant firm. The firm lost some good brains/ employees including marketing manager one Basaba Simon.

Last year, the majority shareholding of NIKO insurance was taken over by Sanlam Emerging Markets (SEM).

The merger between NIKO and Sanlam means the later can focus life Assurance while former will focus on General insurance.

Sanlam is said to be very strong on life Insurance given her experience, and working relationship with hospitals in South Africa and Globally, it’s the point of reference for Medical travel insurance. On a whole, the potential for growth of the insurance industry is immense. Given its limited market penetration, people should watch out for big gains.

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