Announcements Insurance

GA Insurance Limited’s acquisition of Nova Insurance Company Limited not expected to have an immediate rating impact

Johannesburg, 11 May 2020 – GCR Ratings (“GCR”) views GA Insurance Limited’s (“GA Kenya” or “the group”) acquisition of Nova Insurance Company Limited, domiciled in Uganda, to be credit neutral, given the currently immaterial size of the transaction. However, we believe enhanced foot-print in East Africa could improve premium diversification and earnings over the longer-term. Before the acquisition, GA Kenya had both short-term and long-term insurance business units in Kenya and Tanzania. The transaction to acquire 100% shareholding in Nova Insurance Company Limited, renamed GA Insurance Uganda Limited (“GA Uganda”), was finalised on 1st November 2019, providing the group with exposure to the largely profitable Ugandan market.

GCR currently rates GA Kenya at A+(KE), with a Stable Outlook, reflecting the insurer’s sound financial profile and a neutral business profile. The insurer’s market share registered at 5.0% in FY19 (FY18: 4.7%), maintaining its sixth position in the Kenyan short-term insurance industry. On the other hand, GA Uganda is a fringe player in the Ugandan short term insurance market, holding a market share of 0.4% in FY19. In terms of contribution to group revenue, the new acquisition is likely to account for around 1% of FY20 consolidated gross premiums.

Notwithstanding the modest premium contribution of GA Uganda, GCR notes the group’s expanding footprint in East Africa, leveraging off successes in the core market and strong gross premium growth in Tanzania (FY19: 34%), as potential for an enhanced business profile over the longer term. Furthermore, the acquisition is expected to achieve operational, capital, regulatory, and financial reporting efficiencies in Uganda and has no effect on the existing rights and benefits of policyholders or contract holders from either company.

Analytical Contacts

Primary analyst
Godfrey Chingono
+27 11 784 1771
Johannesburg, ZA GodfreyC@GCRratings.com +27 11 784 1771
Secondary analyst Linda Matavire Insurance Associate
Johannesburg, ZA LindaM@GCRratings.com +27 11 784 1771
Committee chair Matthew Pirnie Group Head of Ratings
Johannesburg, ZA MatthewP@GCRratings.com +27 11 784 1771

Related Criteria and Research

Criteria for the GCR Ratings Framework, May 2019
Criteria for Rating Insurance Companies, May 2019
GCR Ratings Scales, Symbols & Definitions, May 2019
GCR Country Risk Scores, May 2020
GCR Insurance Sector Risk Scores, May 2020
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