Swiss insurance firm buys minority stake in African Trade Insurance for US$10m

KENYA – Swiss insurance firm Chubb has bought a 3.5 percent stake in Nairobi-based underwriter African Trade Insurance Agency (ATI) for US$10 million (KSh1 billion).

Chubb is the first global property and casualty insurance company to become a shareholder in ATI which issues covers against credit and political risks in Africa.

It joins ATI’s list of shareholders including governments, multilateral organisations and companies like Kenya Re which acquired a 0.37 percent stake for US$1 million (KSh100 million).

The transaction gives ATI new capital injection and offers Chubb an opportunity to build relationships with the company which sometimes requires partners to share risks in high-value insurance contracts.

Chubb, which is traded on the New York Stock Exchange, had US$168 billion K(Sh17 trillion) assets as of December 2018. Its shareholder funds stood at US$50 billion (KSh5 trillion) in the same period.

The multinational is a leading underwriter of political risk insurance and reinsurance through two of its businesses — Sovereign Risk (a specialty underwriter based in Bermuda) and Chubb Global Markets (its London market division).

“With Chubb’s long-standing expertise in political risk and credit underwriting, we see our investment in ATI further advancing their important mission to promote investment, trade and economic growth throughout Africa,” the multinational’s chief executive Evan Greenberg said in a statement.

ATI supports trade and investment in African member states by providing comprehensive hedging solutions, offering covers against political and credit risks.

It was established by treaty in 2001 and its shareholders currently include 16 African nations and 10 institutional members. Kenya, for instance, has a 10.36 percent stake in ATI and is the company’s top shareholder.

It is followed by Uganda (8.38 percent), Democratic Republic of Congo (7.1 percent) and Malawi (6.37 percent). Current shareholders will undergo a minor dilution once Chubb is issued with new shares in the company.

ATI issued KSh83.6 billion (US$836m) covers in Kenya last year, with the company assuming Sh20 billion of the risks and passing the rest to other parties.

“We are delighted to welcome Chubb as one of our shareholders. Chubb’s global reach, financial strength, and expertise in this field positions them as a strategic shareholder for ATI as we look to build institutional resilience and broaden our global networks,” ATI’s acting CEO John Lentaigne said in a statement.

“We look forward to Chubb’s future involvement in further promoting ATI’s development mandate across the African continent.”

The insurer’s products include protections against various political risks including wars, seizure of an asset by the government, defaults or change in laws.

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