Liberty Kenya exits 60% stake in Heritage Insurance Tanzania

In a move that marks a significant shift in its regional strategy, Liberty Kenya Holdings has announced its decision to exit its 60 per cent stake in Heritage Insurance Tanzania. The decision comes on the back of a strong full-year performance, which saw the company doubling its earnings and boosting shareholder payouts. Group CEO, Kieran Godden, shed light on the divestment's rationale and its implications in an exclusive interview with CNBC Africa. According to Godden, the exit from Heritage Insurance Tanzania is a strategic move aimed at streamlining the company's focus on its core operations in Kenya. The sale is expected to be finalized in the first half of the year pending regulatory approvals. Godden emphasized that the primary goal of the divestment is to free up capital within the business, with plans for redeployment yet to be determined. One of the key concerns raised during the interview was the apparent disconnect between the company's doubled earnings and negative cash flows from operations. Godden clarified that the anomaly was primarily due to accounting adjustments related to the Tanzania business disposal. He reassured investors that the core cash flow generation remained positive and attributed the discrepancy to technical accounting nuances. The announcement of a special dividend, signaling excess capital in the business, was also a focal point of the discussion. Godden explained that while the special dividend reflected a strong financial year, the company aimed to optimize its return on equity by reducing capital load. He underscored the importance of maintaining financial strength to ensure the sustainability of the business. Regarding future profitability, Godden highlighted the company's focus on core operating earnings and risk management. Despite the exceptional performance driven by investment gains in previous years, Liberty Kenya is committed to enhancing sustainable profitability through core business operations. The CEO expressed confidence in the company's financial position and reiterated their dedication to generating significant returns for shareholders. Looking ahead, Godden discussed the macroeconomic environment's impact on the company's underwriting and investment strategy. He emphasized the importance of addressing consumer education and demystifying the insurance industry to expand coverage. Liberty Kenya's initiatives, such as the 'Mind My Money' training sessions and 'Money Master Show' on YouTube, aim to enhance financial literacy and build trust among customers. In conclusion, Liberty Kenya Holdings' divestment from Heritage Insurance Tanzania represents a strategic shift to strengthen its focus on the Kenyan market. With a firm commitment to financial stability and sustainable growth, the company is poised to navigate the evolving landscape of the insurance industry in East Africa.