KENYA – PTA Reinsurance Company (ZEP-RE) is eying a 56% stake in an insurance intermediary as it seeks to deepen covers for smallholder farmers in Africa.
The re-insurer says it has sought regulatory approval to acquire a controlling stake in Agriculture and Climate Risk Enterprise (Acre) Africa which is registered in Kenya as an insurance surveyor.
Zep-Re has already received nod from shareholders to proceed with the deal that will give it a say in a firm that develops and distributes agricultural insurance products.
The continental re-insurer also last year extended its product mix to include agricultural insurance cover citing high potential in the sector.
Loss ratios—paid claims as a percentage of premiums earned— for agricultural insurance and reinsurance has been high, making many underwriters and re-insurers shun it.
Globally, less than 20% of smallholder farmers currently have agricultural insurance cover while in Sub Saharan Africa, it is less than 3%.
Acre Africa, whose presence extends to Tanzania and Rwanda, also offers advisory services to development organizations and insurance regulatory associations.
“Agricultural insurance is rarely available. Where it exists, insurance covers a very small segment of farmers. Smallholders face numerous risks, especially related to changes in climate”Hope Murera – Managing Director, Zep-Re
Zep-Re said, without giving details, that the transaction will see it inject additional cash into the business.
Acre Africa’s main current shareholders are the Syngenta Foundation for Sustainable Agriculture (SFSA), the Adolf H Lundin Charitable Foundation and the Grameen Crédit Agricole Foundation (Grameen).
Zep-Re chief executive Hope Murera said the re-insurer hopes to grow agricultural insurance and reinsurance given that uptake is currently low in Sub-Saharan Africa.
“Agricultural insurance is rarely available. Where it exists, insurance covers a very small segment of farmers. Smallholders face numerous risks, especially related to changes in climate,” said Ms Murera.
SFSA head of global insurance solutions Olga Speckhardt said Acre Africa will also deepen focus on helping smallholder farmers navigate through climate change.
“The additional resources for Acre Africa will help enhance climate risk insurance solutions to address both gaps, and hence increase farmers’ resilience and growth in the agriculture sector,” said Mr Speckhardt.
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