Category Archives: medical insurance

NSE Charity Day 2019 supports the fight against cancer.

The fifth Nairobi Securities Exchange (NSE) Charity Day held today spotlighted the prevention and management of cancer in Kenya.  All the day’s equities trading fees will be donated to the National Cancer Institute of Kenya, a body that has been mandated to coordinate all cancer management activity including research and the setting up a national cancer registry.  

NSE Vice Chairman Bob Karina said that previous Charity Day’s had been staged with different themes and raised over Kshs 30 million to support identified worthy causes. The NSE supported wildlife conservation in 2015, the environment in 2016, and girl-child protection in 2017, while last year they supported education endeavours. The NSE Company Secretary Kuria Waithaka mentioned organizations that have received support from previous “charity days” included SOS Children’s Home, Joy Children’s Home, Save the Elephants and the Borana Ranch Conservancy – where the NSE had adopted and named a rhino “Hisa,” which is Swahili for ‘shares.’

Barclays Kenya’s Head of Markets, Anthony Kirui said that the Barclays which had been a partner of the NSE Charity Day for the last three years was in the final stage of its brand transition to Absa. The new identity was being rolled out with a strategy to put customers at the front and some of the tailor-made services the bank now has include unsecured credit for small & medium enterprises (SME’s) of up to Kshs 10 million (~$100,000), and LPO financing of up to Kshs 50 million, while mortgages can be 100% financed.

Kenya’s Cabinet Secretary in the Ministry of Health, Sicily Kariuki said that the country recorded 48,000 new detections of cancer and 33,000 deaths every year and that everyone knows someone who has been affected or has fundraised towards someone’s cancer treatment.

She added that while the Government was investing in interventions in the cancer fight and to reduce the cancer burden through new radiotherapy and cancer centres, 80% of the fight was within people’s control; she asked that people mind their lifestyles, meals, physical activity, environments & communities, and go for early screenings.

Celebrity participants at the trading day included Sheila Mwanyigha, Terryanne Chebet Suzie Wokabi, Nameless, Patricia Kihoro, Pinky Ghelani  and June Gachui, among others, placed NSE client trades online and over phones working alongside real stockbrokers. The day saw 13.27 million shares traded worth Kshs 528.6 million with top activities being around Safaricom and Equity Bank.

Cancer Insurance in Kenya

Kenyan insurance firm, ICEA Lion (the Insurance Company of East Africa), launched a cancer insurance policy in October. They have been advertising in newspapers, TV with the promise of cover for just Kshs 165 ($1.$ per month). Yet there is a billboard, and their own FAQ’s, that state that the policy is NOT a medical insurance cover. So what is it?

Cancer impacts: Cancer is becoming more prevalent, affecting thousands of Kenyan every year and has been cited in the illness and death of many Kenyans. Today’s Nation newspaper has a report than one in five Kenyans will develop cancer in their lifetimes and that one out of every eleven deaths in the country is due to cancer.

Cancer afflicts all groups, and the working and the wealthy seem as afflicted as poorer Kenyans, who may not have any medical insurance. Treatment comes with hefty bills for scans, operations, radiation, chemotherapy and other treatments, whether in Kenya or overseas, especially in India. There are dozens of fund-raisers every month within families or online, or in church groups etc.

Features: The ICEA cover pays out a percentage of the sum insured when one is diagnosed with invasive cancer (which is spreading to other organs or healthy body cells) or a brain tumour.

ICEA pays the insured person, not the hospital so that they meet their medical or other ordinary living expenses for which cancer treatment would pose a burden. The policy offsets financial obligations arising from medical expenses and is targeted at heads of households. Recent surveys on financial inclusion found that 42% of Kenyans use their own savings to manage shocks and risks, such as medical treatment, and 28% use social networks.

The ICEA policy pays 10% upon diagnosis, 5% of the sum insured for each course of chemotherapy (for up to five instances or five years), 5% of the sum insured for each course of radiotherapy (for up to five instances or five years), and 20% of the sum insured for one surgical procedure in the first five years.

Another 10% is paid in case there is a relapse between years five and ten, and another 10% is paid if there is a remission after year ten. If someone requires palliative care (basically pain management with no more chance of recovery), 100% of the remaining insured sum is released.

For brain tumors, 10% is paid on diagnosis, and 40% of the insured sum can be used to pay for surgery.

Payment is made within two weeks (14 days) of a claim. Payments can be made to the policy owner, or their beneficiaries and is done regardless of other medical insurance in place.

Joining: No medical tests are required for sums up to Kshs 5,000,000 (~$49,250). The maximum age to join is 60 years and the cover expires when one turns 65 years. The policy runs for a minimum of 5 years.

Policy Costs: ICEA has a premium calculator on their website e.g. for a 25-year old to have the cover of Kshs 5 million, it will cost Kshs 1,174 per month or 14,000 per year. And for Kshs 10 million (~$98,500) of cover, that will be Kshs 2,349 per month or Kshs 28,187 ($277) per year. The cost increases as one gets older and if one is 45 years old, and with the looming cap of 65 years, to get Kshs 10 million cover will cost 18,310 per month or Kshs 219,722 ($2,164) per year. Also, payment is waived if someone is diagnosed with stage 4 cancer.

Exclusions:

  • If one is diagnosed within three months of purchasing the cover.
  • If one has signs of cancer within the 12 months before they purchased the policy or had been diagnosed earlier.
  • No payments for surgery to diagnose cancer.
  • Benign or malignant tumours (i.e. cancer which is not spreading )
  • For some prostate tumors or some leukemia (blood cancer) types.
  • If a woman had a mastectomy or lumpectomy within five years before the policy started.
  • For any cancer caused by a pre-existing condition.

Medical Insurance in Kenya: Medical insurance is not a lucrative product. According to the Association of Kenya Insurers (AKI), eleven companies underwrote medical insurance of more than one billion shillings in the year, topped by Jubilee, followed by others such as AAR, Resolution, APA, CIC, and Madison. But the industry saw Kshs 56 billion of claims in 2018, that was led by medical insurance with claims of Kshs 20 billion ($197 million), followed by private motor and commercial motor with claims of about Kshs 14 billion each. Only seven out of twenty-three companies made an underwriting profit from medical insurance.

⁩Other firms with medical insurance that extends to some cover for cancer-related illnesses include UAP / Old Mutual, GA Insurance, and the National Hospital Insurance Fund under their “SUPA” cover.

Genghis Stock Picks for 2019

Nairobi-based investment bank Genghis Capital launched their 2019 “investor playbook” with the theme of embracing value. 2018 was a challenging year for the Kenyan economy and capital markets and that is expected to continue in 2019, but this also presents opportunities for investors.

Kenya has a relatively small number of stocks (65) on the Nairobi Stock Exchange (NSE) – and Genghis chose nine stocks as their 2019 financial (banking & insurance) and non-financial picks for investors, in three categories:

  • Momentum stocks: Equity Bank, East African Breweries, KCB Group, Safaricom.
  • Income stocks: Stanbic, Barclays Kenya, Standard Chartered, KCB. 
  • Value stocks: Kenya Reinsurance, KCB, Bamburi Cement. 

They cited that Safaricom scored positively in every category while KCB and Equity banks had embraced digitization, high asset quality and low cost structures.

Other points from the playbook launch presentation:

  • They do not expect a repeal of interest rate caps this year, even though its impact has been negative on the economy.
  • Funds raised for infrastructure bonds are not all being used for that; some are going to retire other debts and they should be properly used
  • Public-private partnerships are not coming to fruition; paperwork for the Nairobi-Nakuru highway was submitted in April 2018 but there has been no decision.
  • To a question – “what is the regulator doing to increase the confidence of investors amid fraud incidents?” – the CMA can only do so much and the onus is still on the company directors. International markets have graver penalties than Kenya and perhaps it is time the Director of Public Prosecutions started looking at some cases here and following through on enforcement. 
  • While Kenya Re is a pick in the playbook, they generally don’t cover the insurance sector – it has challenges including fraud, price under-cutting, and low penetration levels (3%) and a lot has to happen to unlock value and growth in the insurance mass market. Kenya Re is there because it is under-valued (owing to lack of clear strategy and proper management) but would be desirable to other insurance investors if the government decided to sell its shareholding.
  • They expect one main listing and others on the smaller NSE boards this year. But while a number of planned privatizations have been mentioned  – Consolidated and Development banks, Kenya Pipeline, Kenya Ports they face numerous hurdles while others like sugar companies in Western Kenya have been on the pipeline since 2011. 

M&A Moment: January 2019

The Competition Authority of Kenya recently approved the completion of several corporate merger and acquisition (M&A) deals. They are interesting in that they reveal some revenue and deal value numbers that private companies, acquirers, and equity funds usually don’t make public.  The deals were all approved with exclusions as the transactions between the affected companies  will not affect competition negatively and they met the threshold for exclusion under the “merger threshold guidelines.”

The deals and exclusions include:

Airline/ Oil/Energy/Mining M&A

  • (The Competition Authority of Kenya [CA-K]) .. Excludes the proposed acquisition of 51% of Selenkei Ltd by Frontier Energy as the acquirer assets for the preceding year (2017) was KShs. 225 million while the target’s assets was KShs. 4 million and the combined assets valued at KShs. 222 million meet the threshold for exclusion.
  • Excludes the proposed acquisition of control of Paygo Energy by Novastar Ventures East Africa Fund 1 LP and FPCI Energy Access Venture Fund as the acquirers had no turnover for the preceding year 2017 while the target’s turnover was KShs 2 million
  • Excludes the proposed acquisition of 51% of Cedate by Frontier Energy as the acquirer assets for the preceding year 2017 was KShs. 225 million while the target’s assets was KShs. 355 million and the combined assets valued at KShs. 580 million meet the threshold for exclusion.
  • CA-K approved the proposed acquisition of the entire issued share capital in Iberafrica Power (E. A) by AEP Energy Africa
  • CA-K approved the proposed acquisition of control of Consolidated Infrastructure Group by Fairfax Africa Holdings.
  • edit The CA-K has approved the acquisition of Cemtech Ltd by Simba Cement, which is owned by the Devki Group. Cemtech has limestone and clay deposits and licenses for extraction in West Pokot but has been dormant for a decade. Its shareholders have been looking for a partner (another deal had been mooted in 2013 ) to finance a cement plant, and Simba plan to resuscitate it by acquiring its land, business, intellectual property, records, equipment, goodwill, licenses, stock and third party rights. Simba has an 8% share of the cement market behind Bamburi (33%), Mombasa Cement (16%), East African Portland (15%), Savannah (15%), National (8)and Athi River Mining (13%) (March 2019).

Banking and Finance: Finance, Law, & Insurance M&A

  • Excludes the proposed acquisition of 44% of Cellulant Corporation by The Rise Fund Certify, L.P. as the acquirer had a turnover of KShs. 93 million for the preceding year 2017 while target had a turnover of KShs. 752 million and therefore, the combined turnover of KShs. 844 million meets the threshold for exclusion.
  • Excludes the proposed acquisition of 12% of Pezesha Africa with certain controlling rights by Consonance Kuramo Special Opportunities Fund 1 as the acquirer’s turnover for the preceding year 2017 was KShs. 6.2 million while the target’s turnover was KShs. 3.1 million
  • Excludes the proposed acquisition of 100% of Serian Asset Managers by Cytonn Asset Managers as the acquirer had a turnover of KShs. 0.9 million for the preceding year 2017 while target had a turnover of KShs. 1.1 million for the preceding year 2017 and therefore, the combined turnover of KShs. 1.9 million meets the threshold for exclusion.
  • The Competition Authority approved the acquisition of indirect control of Abraaj Investment Management by Actis International. Abraaj controls Star Foods Holdings, which ultimately controls Java House Ltd in Kenya.
  • CA-K approved the proposed purchase and subscription of up to 25% shareholding in Prime Bank by Africinvest Azure SPV

Agri-Business, Food & Beverage M&A

  • Excludes the proposed acquisition of 99.9% of  Twiga Foods Limited by Twiga Holdings as the acquirer has no operations in Kenya and therefore had no turnover for the preceding year 2017 while the target’s turnover was KShs. 140 million and the transaction meets the threshold for exclusion.
  • Excludes the proposed acquisition of the business and assets of Anchor Flour Millers Company by Archaic Industries Kenya as the acquirer is a natural person with no business activities and had no turnover or assets for the preceding year 2017 while the target’s turnover was KShs. 97.3 million.
  • Excludes the proposed acquisition of class B ordinary shares in Fertiplant East Africa by Oikocredit, Ecumenical Development Cooperative Society U.A as the acquirer is a natural person and had no turnover or assets for the preceding year 2017 while the target’s assets were valued at KShs. 47.5 million.
  • The Competition Authority approved the proposed acquisition of 100% of Art-Caffe Coffee and Bakery, which has 23 outlets around Nairobi, by Artcaffe Group – which is wholly owned by Emerging Capital Partners (ECP) Fund IV.
  • CA-K approved the proposed acquisition of certain assets and part of the business of Kreative Roses limited by Kongoni River Farm on condition that the target retains 43 of its employees while the acquirer employs the remaining 362 employees for at least one year after the completion of the proposed transaction.
  • edit The biscuit manufacturing and selling business carried on by Golden Biscuits (1985) at L.R. No. 209/4260, Kampala Road, Industrial Area, Nairobi, will be transferred to Trufoods Limited pursuant to the terms of a business and asset transfer agreement entered into between the Transferor and Transferee on 7th February, 2019.

Health and Medical, Pharmaceutical M&A

  • Excludes the proposed acquisition of 32.5% of the shares with certain veto rights in King Medical Supplies by LGT Capital Invest Mauritius PCC Cell E/VP as the acquirer is a newly incorporated company and had no turnover for the preceding year 2017 while the target’s turnover was KShs. 20.9 million.
  • Excludes the proposed acquisition of 32.5% of the shares with certain Veto Rights in City Eye Hospital by LGT Capital Invest Mauritius PCC Cell E/VP as the acquirer is a newly incorporated company and had no turnover for the preceding year 2017 while the target’s turnover was KShs. 62.1 million.
  • Excludes the proposed acquisition of sole control of Hain Lifescience East Africa Kenya by Bruker Daltonik GMBH as the acquirer’s turnover for the preceding year 2017 was KShs. 102 million while the target’s turnover was KShs. 106 million and the combined turnover of KShs. 208 million meets the threshold for exclusion.
  • Excludes the proposed acquisition of the manufacturing and distribution business of Pharmaceutical Manufacturing Company (Kenya) by Shalina Healthcare Kenya as the acquirer’s assets for the preceding year 2017 was KShs. 0.4 million while the target’s value of asset was KShs. 43 million and the combined value of asset of KShs. 44 million meets the threshold for exclusion.
  • Excludes the proposed acquisition of certain assets of Maghreb Pharmacy by Goodlife Pharmacy as the target had a turnover of KShs. 15 million for the preceding year 2016 and therefore, the transaction meets the threshold for exclusion.
  • Excludes the proposed acquisition of 60% shareholding in AK Life Sciences by CSSAF Lifeco Holdings as the acquirer had a turnover of KShs. 377 million for the preceding year 2017 while target had a turnover of KShs. 125 million for the preceding year 2017 and therefore, the combined turnover of KShs. 503 million meets the threshold for exclusion.
  • The competition authority approved the proposed acquisition of the entire share capital in Arysta Lifescience Inc by UPL Corporation.
  • The Competition Authority authorized the proposed investment by Tunza Health Investments in Pyramid Healthcare Ltd.
  • The Competition Authority approved, the acquisition of 100% of the business and assets of Desbro (Kenya) by Brenntang (Holding) B.V. on condition that Brenntang retains the 80 employees of Desbro for a period of one year. Desbro distributes over 600 industrial chemicals to various industries in Kenya, Uganda, Rwanda, Burundi and Ethiopia.

Logistics, Engineering, & Manufacturing M&A

  • Excludes the proposed acquisition of 100% of the shares in JGH Marine A/S and JOHS. Gram-Hanssen A/S by Pitzner Gruppen Holding A/S  as the acquirer has no presence in Kenya and, therefore, had no turnover for the preceding year 2017 while target had a turnover of KShs. 392 million for the preceding year 2017 and therefore, the transaction meets the threshold for exclusion.
  • Excludes the proposed acquisition of the assets and business of Socabelec East Africa by Cockerill East Africa as the acquirer had a turnover of KShs. 193, million for the preceding year 2016 while target had a turnover of KShs. 226 million the preceding year 2016 and therefore, the combined turnover of KShs. 419 million meets the threshold for exclusion.
  • Excludes the proposed acquisition of 55% of  Air Sea Logistics (ASL) by Expolanka Freight PZCO as the acquirer had no turnover for the preceding year 2017 while the target’s turnover for the preceding year 2017 was KShs. 8 million and therefore meets the threshold for exclusion.
  • Excludes the proposed acquisition of the assets of Rich Logistics (K) by Bigcold Kenya as the acquirer is newly incorporated and hence, had no turnover for the preceding year 2017 while the target had a turnover of KShs. 48 million for the preceding year 2017 and therefore, the transaction meets the threshold for exclusion.
  • CA-K approved the proposed acquisition of the stationery and shavers manufacturing, sales and distribution of stationery, lighters and shavers business of Haco Industries Kenya  by BIC East Africa.
  • CA-K approved the proposed acquisition of the Kenyan freight forwarding business and assets of Dodwell & Co (East Africa) and those of Inchcape Shipping Services Kenya by ISS Global Forwarding (Kenya) – which is owned by Investment Corporate of Dubai (ICD). 
  • The Competition Authority approved the proposed acquisition of the assets and business of Blue Nile Wire Products by Blue Nile Rolling Mills.
  • The Competition Authority approved the acquisition of the assets and business of Wild Elegance Fashions by Wild Elegance Africa.
  • The Competition Authority approved the proposed acquisition of 73.6% of Sintel Security Print Solutions by Ramco Plexus. Sintel is involved in the printing and supply of scratch cards, highly secured cheques and custom labels.
  • CA-K approved the proposed acquisition of the business and assets of Office Mart by Sai Office Supplies
  • CA-K approved the proposed acquisition of the business and assets of Lino Stationers by Sai Office Supplies on condition that the acquirer employs not less than 57 out of the 74 employees after the completion of the proposed transaction.

Real Estate, Tourism, & Supermarkets M&A

  • Excludes the proposed acquisition of 40% of Dufry Kenya by Ananta as the acquirer had no turnover for the preceding year 2016 while the target had a turnover of KShs. 269 million for the preceding year 2016 and therefore, the transaction meets the threshold for exclusion.
  • Excludes the proposed joint venture between Scan-Thor Group and Otto International GmbH as the acquirer has no market presence in Kenya and, therefore, had no turnover for the preceding year 2017 while target had a turnover of KShs. 11 million for the preceding year 2017 and therefore, the transaction meets the threshold for exclusion.
  • Excludes the proposed transfer of 100% of Norbu Manda Pwani Ltd to Margot Kiser from the provisions of Part IV of the as the acquirer is a natural person and had no turnover or assets for the preceding year 2017 while the target’s assets were valued at KShs. 47.5 million.
  • Excludes the proposed acquisition of the business and assets of Giraffe Ark Game Lodge by Archaic Industries Kenya as the acquirer is a newly incorporated company and had no turnover for the preceding year 2017 while the target’s turnover was KShs. 51.5 million
  • Excludes the proposed acquisition of the business of Ocean Sports (2006) by Ocean Sports Hotel as the acquirer had no turnover for the preceding year 2016 while the target’s turnover was KSh. 44.6 million.
  • Excludes the proposed acquisition of 34.48% of African Forest Lodges by Earth Friends LLP as the acquirer is a newly incorporated company and has no assets or turnover for the preceding year 2016 while the target’s assets was KShs. 197 million.
  • Excludes the proposed acquisition of the (Furniture, fittings, equipment and Prefabricated building) assets of Me To We Ltd by Bogani Training, excludes the proposed acquisition of the (motor vehicle) assets of Me To We Ltd by Minga Ltd and excludes the proposed acquisition of the assets  (vehicles, beads, stocks) of Me To We Ltd by Araveli For Mamas as the acquirers had no turnover for the preceding year 2016 while the target’s turnover for the preceding year 2016 was KShs. 68 million and therefore, meets the threshold for exclusion.
  • CA-K approved the proposed acquisition of control of Tumaini Self Service by Sokoni Retail Kenya. Tumani operates retail stores in Nairobi, Kisumu and Kajiado.
  • CA-K approved the proposed acquisition of Nova Academics Tatu City Property Ltd by Summit Real Estate Pty
  • The Competition Authority of Kenya approved the proposed acquisition of 100% of Hillcrest Investment Holdings by Education Asia Holdings – which is an investment holding company owned by GEMS Global Schools. Hillcrest operates three learning institutions in Nairobi – Hillcrest Early Years, Hillcrest Preparatory School and Hillcrest Secondary School.

Telecommunications, Media & Publishing M&A

  • Excludes the proposed acquisition of 39% of the shareholding in the Star Publication by Avandale Investments and 10% of the shareholding by Adil Arshed Khawaja as the acquirer had no turnover for the financial year ending 30th June 2017 while the target’s turnover was KShs. 679 million.
  • Excludes the proposed acquisition of Mobile Web (trading as Hivisasa) by Novastar Ventures Easy Africa Fund 1 L.P.  as the acquirer had no turnover for the preceding year 2017 while target had a turnover of KShs. 14 million or the preceding year 2017 and therefore, the transaction meets the threshold for exclusion.

Other M&A

  • Excludes the proposed acquisition of Dc Xiang Kenya Company by Lin Bingwei from the provisions of Part IV of the Act as the acquirer is a natural person with no business activities and had no turnover or assets for the preceding year 2017 while the target is a newly incorporated company and had no turnover or assets;
  • Excludes the proposed acquisition of 100% of the shares in Kesar Investments by Dipak Lakshman Halai and Ramesh Kurji Visram as the acquirer are individuals and had no turnover for the preceding year 2016 while the target’s assets was KES 0.07 million
  • CA-K approved the proposed acquisition of Zelepak Africa by PPG  Holdings

CA-K, as a regulator, has not yet reported on two mega deals; the proposed bank merger between CBA and NIC and the buyout of Kenol by Rubis that will lead to a delisting of the company. edit: Later in January 2019, the Competition Authority approved the Rubis-Kenol deal along with a few other deals. 

Also, see some other deals approved six years ago.

$1 = Kshs 101

Individual Pension Schemes – Zamara Vuna AGM

Members of the Vuna pension scheme by Zamara met at their annual general meeting (AGM) in Nairobi this week to get updates of the previous year during which the fund grew by 10% to Kshs 2.37 billion. It was a year in which they rebranded from Alexander Forbes Kenya and one in which, the Nairobi Securities Exchange, which had its last good year in 2013 (when it was up 44%), managed to rebound in 2017 to 28% after dipping in the years in-between.

Zamara’s Vuna takes the view that saving for retirement is not a priority among many Kenyans who are juggling many financial requirements every day – so they have designed products for people to save what they can, when they want – people such as the self-employed, small business owners, individuals, overseas workers, and those  who work in organizations that don’t have formal retirement pensions plans. They also accept lump sum contributions and M-Pesa payments.

Vuna has over 5,000 individuals and 180 small companies as members and they give different options for savers according to their risk tolerance, for them to be pooled in the conservative, moderate or aggressive investor portfolios and members can switch their investor profiles once a year. They added an online portal for members to track their contributions and an app that helps members do projections about their retirement savings. This year they are adding a new group life assurance scheme.

They updated members on changes to their schemes, tax rule and answered questions  such as on how to deal with employers who don’t remit deductions and how they decided on making payments to families  of members who have not updated their beneficiary list-  and they cited a study that showed a higher proportion of women do not list their husbands as their beneficiaries, compared to husbands who list their wives. The meeting ended with an advisory caution to members that the only person you’re 100% sure will take care of an “older you” is a “younger you”.