Old Mutual Kenya changes tack to tap mass market ; The Kenyan arm of insurer Old Mutual wants to tap the mass market to grow its life insurance business after a successful private share placement last year, moving away from a focus on high net-worth individuals, its managing director said on Tuesday.
"We predominantly used to operate in the high net-worth segment so we did not have a distribution network. But our strategy has since changed to the mass market," Managing Director Tavaziva Madzinga told Reuters in an interview.
The unit of London-based Old Mutual Plc, which manages assets worth 80 billion shillings, raised 700 million shillings through its share placing in November to fund its move into the middle to lower end of the market.
Old Mutual (Kenya) is the leading asset management and unit trust firm in east Africa's biggest economy, while its insurance business is ranked eighth.
Madzinga said part of the capital injection had been channeled towards local expansion, increasing the number of branches in major towns across Kenya to 11 from two. The rest will fund a technology infrastructure upgrade.
"(Banks) are making money in that (mass) market space. It is not a sector you can ignore," he said.
Old Mutual's insurance unit, which has a capital base of over 1.5 billion shillings, early last week partnered with PesaPoint, which owns a nationwide network of cash distributing machines, to ease payment of premiums outside Nairobi.
Old Mutual (Kenya) made a loss of 647 million shillings in 2009. Full-year results for 2010 are yet to be released. It expects to return to profitability this year, helped by its expansion strategy.
Madzinga said the firm plans to expand elsewhere in east Africa in the next three to five years but would first focus on the Kenyan market.
"If you haven't exploited Kenya, our point of view is that that is the right place to start," he said. "With less than 2 million insurance policy holders, we have not began to tap the local market."