Mudavadi-linked investors eye return to Kenya’s insurance business

Prime Cabinet Secretary Musalia Mudavadi is set to have a bigger stake in Kenya’s insurance industry if an investment company linked to him completes a deal to acquire majority ownership of two insurers from South Africa’s Absa Group.

The transaction involves Absa Life Assurance Kenya and First Assurance Kenya, two established players whose ownership is set to change after Absa agreed to dispose of its controlling interests.

Absa announced on Thursday that it had entered into a sale and purchase agreement with First Assurance Investments Limited, an existing shareholder in the two companies.

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The South African banking group owns 63.32 per cent of each insurer and intends to transfer its entire holding to First Assurance Investments, subject to regulatory approval.

People familiar with the negotiations estimate that the transaction could be worth at least Sh3.8 billion, although the actual consideration has not been made public as quoted by Business Daily.

A deal that could reshape ownership

First Assurance Investments is not a new entrant to the insurance business. The company already has an ownership position in the insurers and is now seeking to increase its control following Absa’s decision to exit direct insurance ownership in Kenya.

Records at the public registry show Syndicate Nominees as the largest shareholder in First Assurance Investments, with a 52.5 per cent holding. Mr Mudavadi previously identified Syndicate Nominees as one of the companies he owned during his vetting for the position of Prime Cabinet Secretary in 2022.

Exclusive Holding Limited, an investment company associated with Mombasa, owns the other 47.5 per cent of First Assurance Investments.

The proposed purchase has an interesting history because it would effectively bring the insurance business closer to investors who previously sold their stake to Barclays Africa.

In 2015, the investors disposed of their interest to Barclays Africa for about Sh2.2 billion. Barclays Africa’s African operations were subsequently rebranded under Absa following the group’s name change.

Mr Mudavadi’s interest in First Assurance is spread across investment vehicles. Besides his interest through First Assurance Investments, he has a direct 12.35 per cent holding through Syndicate Nominees. His combined interest gives him a 21.26 per cent stake.

The other shareholders include businessman Stephen Githiga, who owns four per cent, Chandaria Ventures Limited with 1.67 per cent, and Epoch Investments Limited and Absa Pension Services Limited, each with 0.84 per cent.

Githiga is a former chief executive of First Assurance Company and Sasini. Chandaria Ventures is linked to Darshan and Neer Chandaria, while Epoch Investments is associated with Jambojet chairman Ayisi Makatiani.

The transaction brings together a group of investors with longstanding links to the insurance business at a time when international financial institutions are reassessing their presence in African insurance markets.

Absa confirmed the agreement in a regulatory filing, saying it had agreed to sell its entire interest in the two businesses to First Assurance Investments.

“Absa Group Limited has entered into a sale and purchase agreement with First Assurance Investments Limited,” the group said in the filing.

The deal still requires the relevant regulatory approvals before the ownership change can be completed.

Mr Mudavadi’s proposed return to the insurance business also comes against the backdrop of his sizeable investment portfolio.

During his parliamentary vetting in October 2022, he declared assets worth Sh4.1 billion. His disclosed investments included property, shares in financial institutions and interests in several private companies.

His property portfolio included assets in Riverside valued at about Sh1 billion and rental office buildings worth Sh870 million through Tritone Investments.

He also declared Sh200 million in shares in Exclusive Air Services, which leases helicopters, alongside investments in Jodeci Investment and Malulu Land and Developments valued at Sh120 million and Sh250 million respectively.

High-end vehicles worth Sh44 million were also included in his declaration.

The proposed insurance acquisition adds another significant business interest to that portfolio and comes at a time when Kenya’s insurance sector is attracting fresh capital and ownership changes.

Why Absa is selling its insurers

Absa’s decision to sell the Kenyan insurance companies forms part of a broader retreat from direct insurance ownership across parts of Africa.

The group has already exited insurance operations in Botswana, Zambia and Mozambique, selling the businesses to Hollard International.

Rather than completely abandoning insurance, Absa is increasingly relying on bancassurance, allowing its banking operations to distribute insurance products and earn income from the business without directly owning the underwriting companies.

The strategy has gained traction in Kenya, where Absa Bank’s bancassurance operation recorded a 35 per cent increase in net profit to Sh1.3 billion in the year ended December 2025.

That performance made the bank’s bancassurance business the largest in the country during the period.

The results were different at Absa Life Kenya, where net profit fell by 26 per cent to Sh790.1 million over the same financial year.

Absa explained the wider shift in its 2025 annual report, saying it had moved towards a bancassurance distribution model through partnerships in its African markets.

The strategy enables the bank to remain connected to insurance customers while reducing the amount of capital tied up in insurance subsidiaries.

Kenya remains strategically important to Absa despite the insurance exit. The group is separately increasing its ownership of Absa Bank Kenya from 68.5 per cent to 85 per cent in a transaction valued at Sh30.9 billion.

The two insurers being sold have built sizeable operations in Kenya.

Absa Life Assurance Kenya began operating in 2015 after obtaining a licence from the Insurance Regulatory Authority. It has since established itself among the country’s leading life insurance companies and was the first life insurer in Kenya to adopt bancassurance as a distribution model.

First Assurance has a much longer history. The company traces its Kenyan operations to 1930, when it operated as Prudential Assurance Company.

Kenyan investors later bought the entire business from its British owners in 1991, beginning a new chapter of local ownership.

Today, First Assurance ranks among Kenya’s established general insurers, while Absa Life has built a position among the leading life companies.

The potential change in ownership comes as the country’s insurance penetration remains around three per cent, indicating a market with significant room for expansion.

First Assurance Investments could gain greater control over two businesses operating in a sector with considerable growth potential if the acquisition receives regulatory clearance.

Absa’s exit represents another step in its effort to streamline its African insurance operations and focus on distributing insurance products through its banking network.

The transaction now awaits regulatory approval, after which ownership of the two insurers could shift from a major South African financial group to Kenyan investors with longstanding links to the businesses.