Sonarwa Insurance Ltd, the country’s oldest insurance firm, will not proceed with a plan to be acquired by BK Insurance. The firm’s main shareholders, Rwanda Social Security Board (RSSB), decided not to proceed with the planned acquisition and instead, focus on relevance and impact in the local market. In May this year, BK Group confirmed that they had opened talks with shareholders of the country’s oldest insurance firm in a bid to acquire it. RSSB are the largest shareholders of the insurance firm which has been running for about 45 years. The pension body has a shareholding of up to 100 per cent shares in Sonarwa Life Assurance and 79.21 per cent in Sonarwa General Insurance Company Ltd. According to Richard Tusabe, the Director-General of RSSB, there was no pressure to sell the firm hence choosing to build on the potential the firm has locally to grow insurance penetration. Huge opportunity Tusabe said that with insurance penetration standing at around 2 per cent, there is a huge opportunity for them as investors with the promise of returns. “The potential for Sonarwa and other players is huge out there. One of the ways to do that is merge our efforts where possible. But mergers and acquisitions ought to happen when you are seeking two aims; to increase penetration and increase win-win scenarios for all people involved,” he said. He said that during the negotiations, they assumed that the merger would be in line with the two aims, however, the deal fell short in value proposition. With the merger and acquisition off the table, Tusabe said that RSSB intends to support the two firms scale up insurance in the country and make the most of the opportunities. He, however, did not rule out chances of a merger or acquisition in future saying that they would be open to talk to other players who share their ambitions of growing the sector and creating a win-win scenario. “Along the way, if there is anyone who wants to come back to review the position, we are a business. We are open to discussions, but for now, we want to grow and scale,” he said. Sonarwa General Insurance Board Chairperson Iza Irame said that during the year, focus has been on revamping the performance of the firm by designing new relevant products, innovation and staff restructuring to improve fitness for performance. This she said will be evident in their services and offering as well as innovation to reach previously unserved markets. “We want to look at the needs of various segments of the population and tailor-make products for them, it’s a priority for us as the Board and have delegated that to the management,” she said. Among the aspects that will inform the services by the firm in its new approach include purchasing power and adoption of technology among others. Tony Twahirwa the Managing Director of Sonarwa General Insurance said that they among services they seek to drive uptake in the local market is livestock and crop insurance launched this year. The firm has a total asset base of about Rwf 18.5B but will be selling some of its assets it coming days. However, the sale is not due to financial shortcoming but to comply with the Central Bank regulatory guidelines. Out of the assets, about Rwf 6.5B are non-current assets while the Central Bank’s regulation require that the ratio of property to the total assets should be not more than 30 per cent of the total assets. This, Twahirwa said, will see them offload a section of assets into the market in the coming days. The local market could see consolidations and mergers of insurance companies as firms move to raise capital under the minimum capital requirements for operators. Under the new regime, general insurers are expected to raise Rwf3 billion while life insurance firms are expected to have a minimum capital of Rwf2 billion, up from Rwf1 billion. Sonarwa was created by the Government of Rwanda in 1975. In 2011, the insurance company established two business lines, namely Sonarwa General Assurance and Sonarwa Life Insurance, to comply with the regulator (Central Bank)’s directives.
