Tough test for new CEO as UAP eyes continental market

The new CEO of UAP Holdings certainly has his work cut out for him given the ambitious plans the insurance firm has in store.

However, Dominic Kiarie is certainly up to the challenge, thanks to his vast experience in the insurance sector.

Kiarie took the helm of the firm in January last year after the long-serving CEO, James Muguiyi, retired.

Muguiyi is credited with the expansion of UAP into Uganda, South Sudan, Rwanda, and the Democratic Republic of Congo (DRC).

With such an impressive record of his predecessor, Kiarie obviously has a daunting task to fill his big shoes. However, he is unfazed as he is an old hand in the business.

Kiarie was a key figure when Britam introduced its asset management arm seven years ago.

Therefore, UAP has every reason to count on him as he takes on his new assignment, which is by no means a walk in the park.

A career actuary, Mr Kiarie says UAP is seeking to be a pan-African institution by expanding to the Common Market for Eastern and Southern Africa (Comesa) and other selected markets.

“But first we have to consolidate our existing businesses, strengthen our base before venturing outwards,” he said during an interview in his office at the Bishop Garden Towers, Nairobi.

The strategy, he said, is to target certain markets and identify businesses to invest in.

“We focus around synergies in the operating companies. For example, in Kenya we are fighting to become the leader in the non-life market,” he said.

Kiarie also takes over the company when it is unveiling other ambitious plans aside from expansion.

The firm is diversifying from insurance into property and investment management in a bid to boost income revenue. This is where his experience at Britam will come in handy.

“The purpose of starting the subsidiary is to provide investment management portfolios within the group in order to drive high returns,” said the Cass Business School alumnus.

Insurance businesses contribute 90 per cent of UAP’s earnings, which is expected to gradually reduce to 60 per cent in the coming years.

UAP Investments, which started operations last year, received an approval from the market regulators to act as a fund manager and real estate investment trust (REIT).

REIT is a fund where the underlying investment is the real estate which must generate income from rentals.

The yield is then offered to investors at the bourse. Already UAP Investments has forwarded its REIT products to the Capital Markets Authority for approval.

The investment arm, Kiarie says, will first focus on its existing insurance portfolios before moving to third parties.

The targeted portfolios in future include the high-end US dollar money fund and specialised funds in the mining, energy, and infrastructure sectors.

“We used to invest our portfolios in the standard firms in the market. The experience was not good as they were not giving us strong results because they were bundled with other portfolios. Having our own arm is also about focus,” said the 42-year-old Kiarie.

Its Ugandan investment arm, UAP Financial Services, received licences last year from the market regulators to operate unit trusts and fund management services.

These services are expected to be replicated in Tanzania and South Sudan. UAP also seeks to increase rental income this year.

The Kampala Sh284 million Nakawa Business Park was completed last year in August and is in the process of being occupied.

The Sh1.7 billion Juba 15-storey Equatorial Towers office block is expected to be completed by August.

Juba also houses 15 two-bedroom apartments to tap the high demand for space and housing in the country.

Mr Kiarie said a feasibility study is being conducted in Kigali as the firm eyes Rwanda’s property market.

The insurer’s biggest project is the 31-storey UAP Towers in Nairobi’s Upperhill. The Sh4.5 billion building has been under construction for three years.

“It (Upperhill building) will be our headquarters. We will take five or six floors and lease the rest,” said Kiarie.

These will bring to 10 the number of high-density properties owned by UAP which include Telkom Plaza, Union House, Equity Centre, and UAP Insurance House in Kampala.

Income from rent is expected to hit a billion shillings annually, from the current approximated Sh200 million.

UAP first ventured regionally in 2005 after it acquired a 53 per cent stake in Uganda’s United Assurance Company. One year later it entered the South Sudan market.

In 2011, the firm embraced the strategy of diversifying its portfolio away from the equities market and the insurance business.

The same year in June saw UAP raise Sh4.7 billion from a share sale to three private equity funds — Aureos (Sh1.7 billion), Africinvest (Sh2.1 billion), and Swedfund (Sh845 million).

This saw UAP’s valuation swell to Sh11.75 billion, giving it an ample opportunity to finance its expansion and deepen its activities in the region’s thriving property market.

In 2012 the firm raised Sh750 million cash through a restricted public offer. Part of the overall capital raised was used to expand to Rwanda, Tanzania, and DRC last year.

The group joined the Tanzanian market through a 60 per cent acquisition of Century Insurance Company, which only offers non-life covers.

In Rwanda, the firm established two firms — Union Insurance Rwanda Ltd and an insurance brokerage firm, UAP SPRL RDC. This year Kiarie will seek to introduce life and medical covers in Tanzania, Rwanda and South Sudan.