Will American firm regain its top position?
Kampala, Uganda | ISAAC KHISA | The American Insurance Group (AIG) has re-entered the Ugandan market, exactly two years after its exit, citing a re-alignment of its global business strategy.
Local industry players have naturally warmed up to AIG’s re-entry into Uganda saying it is an endorsement of the growing potential of the insurance industry in the country.
Ibrahim Kaddunabbi Lubega, the chief executive officer at the Insurance Regulatory Authority of Uganda (IRA-U) told The Independent that they had issued a licence to AIG Uganda Limited to start operations as a green field investment.
Prior to its exit and sale of its agents and businesses to Lion Assurance Company, which was later sold to Sanlam Emerging Markets in 2017, AIG had offered non-life insurance policies ranging from motor vehicle, home, travel to accident for over 50 years.
And over the years, the American firm remained a market leader in the East African nation until the 2008 global financial crisis that weighed down the firm, consequently ceding its position to Jubilee Insurance.
At the time of its exit, it was operating at a distant third, with 8.8% market share out of 21 licenced insurance firms offering non-life insurance policies.
Data from IRA-U shows that AIG’s gross underwritten premiums stood at Shs41.04billion in 2015, down from Shs42.93billion in 2014 and Shs50billion in 2013 as the tough economic times took a toll on the economy.
In 2012, the insurance firm generated Shs45billion in gross underwritten premiums, Shs41.03billion in 2011, and Shs36.3billion in 2010.
AIG’s slow growth in business followed the 2008 global financial crisis that saw its brand become an object of derision, especially in the US, with the spill-over felt across its subsidiaries across the world.
The firm’s record $182.3 billion (Shs 626trillion) federal bailout and its subsequent payout of bonuses to employees of a derivatives unit sparked public outrage across the US , leading AIG units to erase the logo from signs, employee identification cards, and marketing materials.
In the wake of the September 2008 bailout, AIG renamed various units Chartis as the parent firm’s financial condition deteriorated.
But four years later, Chartis Insurance rebranded to its former name in a bid to solidify its presence in the US and around the globe, including Uganda.
Insurance experts say the comeback of AIG signals growth potential for the country’s insurance industry.
Meanwhile, Kenya’s Mayfair Insurance Company has also been granted licence to open a new branch in Kampala as it seeks to expand its footprint in the region. The firm that started operations nearly 13 years ago in Nairobi already has a foothold on Rwanda, Tanzania and Zambia.
This development comes as Uganda’s insurance industry continues to record persistent growth, thanks to the government’s ongoing investment in infrastructure and an uptake of agricultural insurance cover.