Musalia Mudavadi and Issa Timamy Linked to Sh3 Billion Deal in Kenya's Insurance Sector

An investment vehicle closely associated with Prime Cabinet Secretary Musalia Mudavadi and Lamu Governor Issa Timamy has agreed to pay an estimated Sh3 billion to buy back majority stakes in two prominent local underwriting firms from South Africa's Absa Group.

The landmark transaction involves First Assurance Investments Limited reclaiming a controlling 63.3 per cent shareholding in both Absa Life Assurance Kenya and First Assurance Kenya Limited, signalling a major local consolidation in Kenya's financial sector.

While Absa Group initially announced an agreement in principle in August without disclosing the exact financial parameters, sources privy to the transaction confirmed the Sh3 billion purchase price.

This valuation pegs the combined equity value of the two underwriting entities at approximately Sh4.77 billion.

The completion of the acquisition remains subject to customary regulatory approvals from statutory bodies, including the Competition Authority of Kenya (CAK) and the Insurance Regulatory Authority (IRA).

The impending buyback represents a dramatic full-circle turnaround for the local investment consortium. Mudavadi, Timamy, and their business associates originally ceded controlling stakes in the underwriters to Absa Group (which was then operating under the Barclays Africa banner) in 2015 for Sh2.2 billion.

Reclaiming these assets a decade later underscores a renewed commitment by indigenous investors to capitalise on long-term growth opportunities within East Africa's financial services market.

Speaking on condition of anonymity, an insider familiar with the ongoing discussions provided key details on the execution timeline, speaking to Business Daily.

"The parties have settled on a Sh3 billion deal. They aim to conclude the transaction before the end of the financial year," the person said.

Official business registry records indicate that First Assurance Investments Limited is held 52.5 per cent by Syndicate Nominees, an investment firm that Prime Cabinet Secretary Musalia Mudavadi declared ownership of during his parliamentary vetting in 2022, and 47.5 per cent by Exclusive Holding Limited, an entity tied to Governor Issa Timamy.

The long-standing commercial ties between the two leaders mirror their historical political partnership within the Amani National Congress (ANC), where Timamy served as Mudavadi’s deputy before the party officially merged into the ruling United Democratic Alliance (UDA).

Currently, Absa Life ranks as Kenya's seventh-largest life insurer, while First Assurance Kenya occupies the 13th spot in the competitive general insurance segment.

The buyout comes at a strategic moment when institutional investors are looking to tap into Kenya's underpenetrated insurance market, where national insurance penetration hovers around three per cent, offering significant runway for long-term premium growth and product innovation.

For Johannesburg-headquartered Absa Group, the multi-billion-shilling divestment aligns seamlessly with a broader continental strategy aimed at exiting direct risk underwriting in favor of an asset-light bancassurance distribution model. Rather than holding underwriting risk directly on its balance sheet, the multinational lender is shifting its focus toward distributing insurance products through its extensive banking network across Africa.

Absa Group has executed similar portfolio divestitures across the continent, recently offloading its full insurance subsidiaries in Botswana, Zambia, and Mozambique to Hollard International.

Detailing the strategic motivation behind the regional realignments, Absa Group highlighted its continental shift in its annual financial disclosure: "We switched to a bancassurance distribution model with key partners across our Africa regions, hence selling our insurance businesses in Botswana, Zambia and Mozambique."

This capital-efficient model allows the lender to generate high-margin, fee-based commission income through its retail branch footprint without committing regulatory capital to back underwriting risks.

The pivot has already paid substantial dividends for the local banking franchise: Absa Bank Kenya's bancassurance net earnings surged by 35 per cent to reach Sh1.3 billion for the financial year ending December 2025, solidifying its position as a market leader in insurance distribution.

In contrast, Absa Life recorded a 26 per cent decline in annual net profit to Sh790.1 million over the same financial period.

Alongside its strategic retreat from direct insurance underwriting, Absa Group is actively expanding its core banking footprint in Nairobi.

The multinational recently increased its equity stake in Absa Bank Kenya to 85 per cent from 68.5 per cent through a monumental Sh30.9 billion transaction, reaffirming its long-term commitment to Kenya's commercial banking landscape.

The Sh3 billion buyback forms part of a broader wave of corporate restructuring and portfolio consolidation reshaping Kenya's insurance landscape.

Facing evolving regulatory requirements and shifting market dynamics, major financial houses, including Britam Holdings, Jubilee Holdings, Sanlam Allianz, and ICEA Lion Group, have recently pursued similar portfolio realignments.

Notably, First Chartered Securities recently finalised an Sh8.5 billion agreement to buy back equity in ICEA Lion that was previously sold to US-based Prudential Financial.

Under the restructured shareholding architecture, Prime Cabinet Secretary Musalia Mudavadi maintains a combined effective 21.26 per cent stake in First Assurance. His interest is held indirectly through First Assurance Investments Limited alongside a 12.35 per cent direct share allocation via Syndicate Nominees.

The underwriter’s shareholder register features several other prominent corporate figures and institutional investors:

• Stephen Githiga: Former chief executive officer of First Assurance and Sasini, holding a 4.0 per cent stake.

• Chandaria Ventures Limited: Maintaining a 1.67 per cent shareholding, representing corporate interests tied to business executives Darshan and Neer Chandaria.

• Epoch Investments Limited: Holding an 0.84 per cent stake, linked to Jambojet chairman Ayisi Makatiani.

• Absa Pension Services Limited: Holding an equal 0.84 per cent allocation in the underwriting entity.