The Rwanda Social Security Board (RSSB) — the country’s pension fund — has finalised the takeover of the country’s oldest insurer, Sonarwa, and has now embarked on turning the firm around.
In the reconfigured business, the pension fund has increased its stake in Sonarwa Life — the life insurance arm of the business — to 100 per cent while it also took a controlling stake of 79.46 per cent in Sonarwa General.
RSSB says with the acquisition over, focus now turns to revamping the firm’s management.
“We finally closed the deal and RSSB is the majority shareholder. Now, we are reorganising the company to ensure that there is sound management in place,” said John Bosco Sebabi, the deputy director-general in charge of fund management at RSSB.
As part of the new management, Aurore Mimosa Munyangaju has been appointed the CEO of Sonarwa life while Tony Twahirwa is the CEO of Sonarwa General.
The immediate task for the new management will be to restore customer confidence in the insurer, which was associated with fraud and not settling claims.
The insurer has been facing cases of unpaid claims advanced by clients and multiple law suits, with some clients reporting having paper policies that were not traceable in the computer system.
Some service providers have been turning away Sonarwa policy holders over unsettled claims.
Mr Sebabi said most of these issues will be addressed after the new management at the firms settles down.
“Once we have a stable management in place all these problems will be addressed. The new management will also work on the products,” he added.
According to a statement from RSSB, the changes in management are expected to boost both companies especially in terms of quality of service delivery.
The takeover is also largely viewed as an opportunity for the firm to regain a positive reputation and restore its former glory.
However, the companies face competition from new entrants like BK General Insurance, UAP and Radiant, and mergers by players such as Soras and Saham.
In 2008, IGI Plc, a Nigerian insurance company, became the majority shareholder of Sonarwa after it acquired a 35 per cent stake. RSSB held the second largest block of shares at 16 per cent, with the remaining 49 per cent of shares split among eight companies.
Subsequent capital calls, which saw the capital base grow in excess of Rwf3.5 billion ($4.1 million) and assets worth more than Rwf14 billion ($16.6 million), made Sonarwa GI the biggest and most capitalised insurance company in the country.
The most recent scandal at Sonarwa involved the company’s former managing director Mawadza Nhomo, and board chairman Charles Mutsinzi Karake, who were arrested for allegedly authorising illegal financial transactions amounting to Rwf191 million ($227,290).
Established in 1975, Sonarwa initially operated under the management of a UK-based company called J H Minet. In 1980, the company’s share capital increased from Rwf50 million ($59,500) to Rwf500 million ($595,000) in 1983, which established the company as the market leader in the local insurance industry.
IGI Plc have been accused of mismanaging the company, with some industry analysts welcoming RSSB’s takeover.
Despite relative growth and stability, the insurance sector still faces major hurdles, despite attracting new entrants in the past few years.
Outstanding insurance claims have been growing over the past few years. Data from central bank shows that by December 2013, the sector had debts worth Rwf13 billion ($15.4 million) , this grew to Rwf16 billion ($19 million) in 2014, Rwf17 billion ($20.2 million) in 2015, and Rwf22 billion ($26.1 million) by September.