M a r k e t N e w s

Africa: Jubilee to acquire firms in expansion strategy

Posted on : Saturday, 3rd January 2015

 “We expect to start operations in various countries from next year. Our approach will involve acquiring existing companies as well as starting new ones,” said the Company‘s Chairman Nizar Juma.

 
In an interview with Business Beat, Mr Juma explained that the company has already started the process of setting up companies in Ethiopia, DRC Congo, Mozambique, Madagascar, Senegal and Côte d’Ivoire in West Africa.
 
He said the company is facing legal challenges in some countries. For instance, in DRC Congo and Ethiopia, the laws do not allow foreign companies to set up there. However, he observed that there are positive indications that the laws are being changed to suit foreign investments.
 
The company had planned to acquire two companies before the end of the year. Juma said negotiations are at different levels in all the companies it has targeted to acquire in the said countries. “Our intention is to expand our market share in Africa and thus benefit from the untapped potential,” said Juma.
 
Mr Juma even though declined to state the total amount of money set aside to finance the ambitious investment programme, he observed that the company’s balance sheet is healthy and it can fund investments in the targeted market.
 
Since the firm’s listing at the Nairobi Securities Exchange in 1984, Juma said the company has never solicited for funds from the shareholders and has been able to undertake a number of investment in both local and in the region market.
 
“Our balance sheet is healthy in terms of cash that we may need to finance the number of projects we are targeting to start in the said markets. Guiding factor into our investment plan is the need to maintain our culture as an insurance companies since we started operations in Kenya 77 years ago,” he added.
 
In the market segments, the company is planning to buy out existing companies. Mr Juma said the various principles will be considered in the buyout, adding that the targeted company must have a turnover of between Sh1billion and Sh2 billion and be an institution that has exposure in more than three markets and have sound track record.
 
 
 
Further, the companies must be completely out of graft record and have enhanced product quality during their existence. This, he explained will provide a solid starting base and continuity of the being occasioned growth.
 
In some markets like Southern Sudan, Juma said plans were restrained following the eruption of the civil war but, the country still remains as one of the rich market segments being considered in the long-term.
 
In Kenya, the efforts will be pursued to enhance penetration, mainly in the low-end market. He observed that the company will introduce micro-insurance in addition to bancassurance. “In the current financial year, our efforts will be pursed to enhanced micro insurance, bancassurance,” Mr Juma said.
 
The growth initiatives will be fast-tracked to enable the company cope up with the cut throat competition in the region. The Jubilee boss noted that the majority of Kenyans living in the low-end market are yet to enjoy insurance services owing to those low income levels as well as lack of awareness.
 
The insurance firm joins other companies in the local market such as the CIC Insurance Group diversifying their business by tapping the low end market. Insurance companies have been avoiding people at the low-end market citing high risks and low return on investment.
 
Juma said the company is investing heavily in new technology as well as educating its clientele to reduce fraud in the industry. “Out of the total claims we settle every year, 40 per cent has an element of fraud,” he said. In 2013, the company Sh20.3 billion claims both in Kenya and in the region.

Source : in2eastafrica.net
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