AIG To Exit Uganda In Planned Pull Out From Smaller Markets

AIG To Exit Uganda In Planned Pull Out From Smaller Markets

American International Group (AIG), the only international insurer, announced plans to withdraw its business from Uganda as part of the global strategy to pull out from smaller markets across the world.

The decision, announced on Tuesday, came days after the insurer sold share worth $143.2 million to Emerald Acquisition Limited at the New York Stock Exchange.

The insurer entered The Pearl of Africa nation in 1962 and has 50 employees, with two outlets in the capital, Kampala and in the western town of Mbarara.

“AIG is creating a simplified organization that positions us to achieve our global strategy based on capabilities and market opportunities,” insurer said in a statement.

The insurer allayed fears to its customers after the exit decision, saying that it will continue to offer services until the expiry of their policies.

AIG has already given termination letters to its employees, indicating that they will receive their severance pay when their employment is terminated at the end of the year.

The pull-out by AIG come amid speculation that another player, AON, a British insurer is set to exit the nation. The firm however refuted the claims, adding that the industry is sound and that AIG’s exit should not be cause for alarm, Daily Monitor reported.

Uganda’s insurance sector recorded an 18 percent growth in net assets, from $91 million in 2014 to $107.4 million in 2015.

Gross claims for both life and non-life policies also grew 16.08 percent to $61.6 million last year, according to IRA data.

Currently, there are at least 25 insurance service providers in the nation.

AIG’s exit is likely to compound investor fears in the struggling economy that has been hit by a reduction in Gross Domestic Product (GDP), a dip in revenue collection, high level of non-performing loans in the banking sector and the suspension of development funds by the World Bank.

The Finance Minister, Matia Kasaija however dismissed claims that the economy is headed into a recession despite a fiscal deficit of 6.7 percent of the GDP due to increase expenditure, Daily Monitor reported.