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Interview with:
Mr. Joseph Ndung'u
Managing Director
Nairobi, April 21st 1999
Contact
Head office
Visiting Address: ICEA Building, Kenyatta Avenue, Nairobi.
Postal Address: P.O. Box 46143, Nairobi, Kenya.
Tel : +254 (2) 221652 / 340365
Fax : +254 (2) 338089
Web: www.icea.co.ke
E-mail : hof@icea.co.ke
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ICEA was established in 1964, shortly after Kenya's independence. What has been its evolution since its creation?
ICEA was established in 1964 as a composite insurance company. At that time it was jointly owned by Eagle Star Insurance Company, Welfare Insurance Company and the New Zealand Insurance Company, who eventually sold the business to local investors. The three founding shareholder institutions had hitherto traded as separate entities in Kenya.
At that time, ICEA was a very small company. The founders, however, had the vision of rapidly positioning ICEA to become a key player in the employee benefits sector, and to evolve into a highly respected composite insurer. This is how the company was able to eventually emerge as the largest provider of group life and pensions products, and also as the largest life insurance company in Kenya. In general business, we are now among the top five insurance companies. And in terms of financial standing, ICEA has the strongest balance sheet of any insurance company in Kenya, with an asset base now in excess of Ksh 9 billion.
ICEA seems to be the jewel in the crown of First Chartered Securities. How did you become part of this holding, and what advantages would you say it has afforded you?
The First Chartered Securities Group (FCS) sprouted out of ICEA. That is, the group had its roots in ICEA, in the sense that this was the first company within the group, its acquisition actually having preceded the establishment of FCS. In the initial stages, ICEA acquired a wide range of assets, including other companies. As this diversity increased it eventually became necessary for a separate holding company to be established into which were hived off those business entities essentially falling outside ICEA's core activity. Thereafter FCS expanded considerably, and within no time emerged as one of the leading business groups in East Africa. ICEA, however, still remains the flag bearer of the group.
Apart from the obvious benefit of synergy, we derive many advantages from being members of such a formidable and diverse group. For instance, through constant interaction with other member institutions and their senior executives, from varying professional backgrounds, a unique cross-fertilization of ideas tales place. From a corporate planning point of view, this gives us the opportunity to consult with strong in-house multi-disciplinary teams, thus minimizing reliance on expensive (and sometimes not particularly focused) external consultancy. Moreover being part of the FCS group means that ICEA's financial strength and stability also is viewed in the wider context of group consolidated resources, thus boosting our competitiveness.
You have mentioned that ICEA is the largest provider of pension products and group life insurer in Kenya. How did you reach that position?
Management of long term funds of any description is founded on integrity and trust. For employers and sponsoring companies, of various types of schemes, to entrust their funds or the fate of their other employee benefits to you they must have faith in your institution. In other words, pension funds and employers must have confidence that their funds are secure in your hands, and that you will at all times meet your obligations under various insurance contracts. ICEA has demonstrated over the years that it has such a profile, capacity and integrity.
Also, ICEA has been highly innovative in its approach. It was, for instance, among the first insurance companies to move away from the traditional pension products, which essentially revolved around endowment contracts, into deposit administration schemes and other more dynamic fund investment options.
What other projects is ICEA involved in?
ICEA owns one of the country's largest property portfolios, comprising mainly of office blocks and residential houses. The company's biggest and probably most prestigious property investment is Riverside Park in Nairobi. We have also put up a number of new apartment complexes: one of which has just been completed in Mombasa; and the latest, but much larger, currently under construction in one of the leading residential areas of Nairobi. | We have also realized the need to explore possibilities of investing outside Kenya, especially in neighboring countries in the East African region. We are initially concentrating our efforts on Uganda, and intend to subsequently move elsewhere in the region. We may even venture further afield depending on how attractive investment opportunities turn out to be in those other markets.
Could you give us a few figures about your company?
I mentioned earlier that ICEA has the largest asset base of any company in the local insurance industry. In the pensions sector, we have funds under management in excess of Ksh 4 billion.
The company's annual combined premium revenue, in short term and long term business, now stands at around Kshs.2 billion. This places ICEA among the top two companies in Kenya, which incidentally lead the rest of the market by a long stretch. Our total investments, valued at over Kshs.10 billion, have the capacity to generate gross returns running into billions of shillings, thus making ICEA one of the prime movers in the local financial and capital markets.
You are not quoted on the Nairobi Stock Exchange. Do you have plans to do so shortly? If not, how do you capitalize your company?
Indeed, we are not a listed company, and have no definite plans to go public. It is not that we do not appreciate that there are benefits in doing so. No, we are aware that the benefits could be immense, especially for companies wishing to raise funds for recapitalization and expansion. At ICEA, however, we have accumulated substantial reserves, which continue to grow; and through its prudent business policy, the company continues to generate further investible funds.
Listing, however, is one of the options we have lined up as part of our long term strategy to take the company into the next critical stage of its corporate evolution.
What are your future plans?
As a developing country, Kenya still has enormous potential waiting to be tapped. In the insurance sector, for instance, it is noteworthy that barely 2% of Kenya's population (of 30 million people) has taken out life insurance policies. In rural Kenya, assets and liabilities, especially in the domestic sphere, remain largely uninsured. And the situation of course is no different in the rest of the East African region. We would like to see how far we can go towards exploiting this potential.
Furthermore, as this part of the world gradually joins the ranks of the more vibrant emerging markets, we see many business opportunities arising. In any case the point of course cannot be over-emphasized that Africa has the potential, with immeasurable economic possibilities. With the changes currently taking place in the world, this continent will stabilize fully politically soon or later; and in so doing it could be transformed into an investor's dream. Indeed, it has been observed that Africa is the world's last economic frontier ---- probably a miracle waiting to happen! In this unfolding scenario, we intend to put our resources and local know-how at the disposal of international investors seeking to forge partnerships with local business enterprises, out of which could emerge Africa's future global corporate institutions and multinationals.
That future may not be as distant as it may seem, the myriad of challenges this continent is currently facing notwithstanding. |
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© World INvestment NEws, 1999.
This is the electronic edition of the special country report on Kenya published in Forbes Global Magazine.
November 29th 1999 Issue.
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