Kenya Re wants to establish a Shariah-compliant subsidiary in Egypt after converting into capital Ksh5.25 billion ($52.5 million) from its cash reserves through issuance of bonus shares.
Re-takaful is the Islamic alternative to conventional reinsurance and operates on Sharia principles.
The State-controlled reinsurer says last year’s decision to issue an additional 2.099 billion bonus shares saw its capital base quadruple from Ksh1.75 billion ($17.5 million) to Ksh6.99 billion ($69.9 million).
Kenya Re’s new capital base meets the revised Egyptian insurance law that was enforced last year, raising minimum capital base for reinsurers from Ksh391.98 million (E£60 million, $3.9 million) to Ksh6.49 billion (E£1bn, $64.9 million).
“Increasing our capital base was necessary for accessing some markets. We are thinking of Egypt for Re-takaful business given the high Muslim population. That could be our next stop next year,” said managing director Jadiah Mwarania in an interview.
He said the firm had also done feasibility studies for Sudan and Nigeria but will be giving priority to Egypt. The company also has presence in Uganda, Ivory Coast and Zambia.
A widening market for Shariah-compliant insurance products in Africa is helping to move the sector away from relying on conventional reinsurance lines.
Mr Mwarania said the move will increase Re-takaful premiums for the firm beyond the Ksh1 billion ($10 million) registered last year.
This was mainly earned from Kenya, Sudan and Middle East markets such as Saudi Arabia.
“The potential is huge given the growing Muslim population and financial inclusion is also rising. Products such as ‘sukuk’ bonds will mean more reinsurance,” said Mr Mwarania.
The reinsurer created a position of Sharia coordinator late 2018 with the main duty being to grow the Re-takaful business.
Kenya Re started trading in 1971 and provides reinsurance services to more than 265 companies in more than 62 countries in Africa, Middle East and Asia.
Last year, it launched a subsidiary in Uganda and started trading. This is in addition to the 11.5 percent stake it owns in Uganda Re.