[2008-06-20]  Jubilee expansion plans draw mixed feelings
Jubilee Insurance Company’s recent announcement of its planned foray into Central and West Africa could bring mixed business returns, analysts say.

On one hand, analysts say a successful business model there will result in business growth for the company and consolidation of its services across three African regions.

They warn that the nature of competition there may be different from eastern Africa’s where Jubilee has a strong presence and failure to adapt could become a major risk factor.

But analysts say the company has the ability to study different markets and adapt to their consumer preferences based following its successful operations across several countries in this region.

“The business model the company has been using here has been successful. The market in those parts of Africa is not fundamentally different from here and this gives them a chance to replicate it there,” said Chris Munene, portfolio manager at Bob Mathews Stockbrokers.

On the home front, the company’s performance is expected to go hand in hand with the expectations of a domestic growing economy, similar to Tanzania and Uganda, where the economies are expected to do better. “Insurance business generally grows with the economy. We are likely to see more underwriting business and specifically an increase in the number of people going for life cover,” said Mr. Munene.

The expectations for business growth are also based on Jubilee’s announcement earlier in the year that it will change its business model by ending it reliance on income from investments in the stock market and instead focus on risk management and on its underwriting business.

The strategy borders on new optimism in the insurance industry following initiatives that are being taken by the industry to ensure that as many Kenyans as possible get into the insurance bracket, through improved distribution channels and better corporate governance.

But industry analysts say the killer strategy for any listed insurance companies like Jubilee will be to come up with a product that serves the masses. Companies that are able to implement such a strategy properly will register exponential growth.

“If the company pioneers this, then its growth will be exponential and it will educate more Kenyans who form a large pool of retail investors on the importance of insurance,” said Mr. Munene.

While Kenya’s consumer market is seen as insurance-ready, the problem is that companies have been unable to come up with lower priced products that can appeal to the masses. Industry commentators said the company that pioneers such a product would reap immense benefits.

Jubilee Insurance Company currently has operations in Kenya, Uganda, Tanzania, India and Mauritius.

The company deals with life and non-life insurance risk such as those associated with death, disability, health, property and liability. It also offers asset management solutions for savings and retirement needs.

The company says its plans for 2008 includes a strategic drive in the life insurance segment, including innovation in distribution and customer orientation, the roll-out of new products targeting customer segments and lifestyle needs such as an education policy cover.

The company is in negotiations with partners in Senegal, Ivory Coast, Burkina Faso, Rwanda and Mozambique.

“We are well advanced in identifying target markets and based on the status of current negotiations, we are confident that Jubilee will have extended its geographic footprint within the next few months,” said Mr. Juma.

Jubilee is an affiliate of the Aga Khan Fund for Economic Development, the economic arm of the Aga Khan Development Network. Established in 1937, Jubilee Insurance is one of the oldest composite insurance companies in Kenya.

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