ATI and APA Insurance sign a US$434 million reinsurance deal
NAIROBI, 19 January, 2010 - In a reinsurance deal valued at US$434 million (Ksh 31 billion) with the African Trade Insurance Agency (ATI), Africa's only multilateral political and credit risk insurer, APA Insurance Ltd will provide coverage, to policy holders in respect of motor and property insurance in Kenya and Uganda against damage. Details of the reinsurance deal were given today at a joint press briefing with Ashok Shah, the Chief Executive Officer of APA Insurance Ltd. and Stewart Kinloch, the Acting Chief Executive Officer of ATI
Under the reinsurance agreement, ATI will act as APA's reinsurer by absorbing over 90% of the risk underwritten on any resulting claims. This arrangement increases APA's capacity to insure an individual property or that of an SME up to a maximum value of USD $3.5million. It is estimated that property to be covered under the SME category will amount to USD 434 million. Higher value properties will be covered under separate agreement.
"The insurance industry in Kenya has been accused of shying away from non-traditional insurances leading to great suffering by the public in terms of loss of property by calamities as in the case of post election violence. This is the reason why we have taken this reinsurance to safeguard our clients' properties." remarked Ashok Shah, APA's Chief Executive.
The insurance will cover individuals and business owners against damage to their property or business interruption caused by political violence, terrorism and sabotage. Insurance companies are gearing up to protect their clients against potential losses to avoid the 2008 post-election violence scenario, where an estimated Ksh 1 billion worth of property damage was not covered by traditional policies in the Kenyan market - and in Uganda against any political violence similar to the recent one which took Kampala by surprise in 2009.
"What makes this deal stand out is that APA intends to provide insurance cover to more modest policy holders as an added benefit at no extra cost. By doing this, APA is really standing up for its customer base, the man on the street," commented ATI's Acting Chief, Stewart Kinloch.
The APA Political Violence reinsurance cover is the third such cover provided by ATI to Kenyan-based insurer. ATI expects to announce additional political violence reinsurance deals in 2010 with insurance companies in Kenya and Uganda as well as other markets that have experienced civil unrest in recent months.