Old Mutual leaves Tanzania, sells insurance business on discount

• Old Mutual Holdings Plc has sold its Tanzanian subsidiary, UAP Insurance Tanzania, for KSh 73.5 million, a price significantly below the unit's net asset valuation
• The sale was approved at Old Mutual's annual general meeting and was driven by UAP Insurance Tanzania's underperformance and inability to achieve expected returns on capital
• UAP Insurance Tanzania, acquired in 2015, struggled with weak operating metrics, leading to the discounted sale to Strategic Ventures Company Limited

Elijah Ntongai, a journalist at TUKO.co.ke, has more than three years of financial, business, and technology research expertise, providing insights into Kenyan and global trends.

Old Mutual Holdings Plc has divested its Tanzanian subsidiary, UAP Insurance Tanzania, for KSh 73.5 million, significantly below the unit's net asset valuation.

Arthur Oginga is the CEO of Old Mutual East Africa Group. Photo: Old Mutual Kenya. Source: Twitter

The sale, approved at the company's annual general meeting on Thursday, was driven by the subsidiary's underperformance and inability to achieve expected returns on capital.

UAP Insurance Tanzania, a short-term insurance business, was acquired in 2015 as part of Old Mutual's strategic expansion into East Africa.

Despite the initial optimism, the subsidiary struggled with weak operating metrics, prompting Old Mutual to offer a discounted price to the buyer, Strategic Ventures Company Limited.

According to Old Mutual's annual report, UAP Insurance Tanzania's value was determined at 50% of its net assets as of December 31, 2023, with the recoverable amount set at 60% of that figure.

This valuation reflects the unit's net assets, which stood at KSh 245 million at the end of December 2023.

Why Old Mutual divested from Tanzania

Despite narrowing its losses to KSh 191.8 million from KSh 265.4 million in December 2022, UAP Insurance Tanzania continued to face financial challenges.

The unit recorded negative net revenues of KSh 216.9 million due to high insurance service expenses, further complicating its financial stability.

Old Mutual East Holdings Plc, a subsidiary of Old Mutual East Africa Holdings Group, held a 60% stake in UAP Insurance Tanzania through its 100% ownership of UAP Africa Limited.

The sale marks a strategic retreat for Old Mutual from the Tanzanian insurance market as it reassesses its East African portfolio.

In a statement, Old Mutual acknowledged the challenges faced by UAP Insurance Tanzania and expressed confidence that the divestiture would allow the company to refocus its resources on more profitable ventures within the region.

"Whilst divesting from the short-term insurance business in Tanzania, we plan to collaborate with local entities to extend our product and service offerings in the region. East Africa remains a key growth node for the Old Mutual Group and therefore we remain committed to the future of East Africa markets, in 2018, we returned our primary operations to the African continent because we saw opportunities for growth," said Old Mutual in a statement as reported by Business Daily.

Early in 2024, Old Mutual announced that it would be selling its full stake in Tanzania, and this decision was ratified during the annual general meeting.

Old Mutual building on sale

Earlier, Tuko.co.ke reported that Old Mutual had put the iconic Old Mutual Tower in Nairobi up for sale.

The building was valued at KSh 5.5 billion.