Financially struggling and heavily cash-strapped Resolution Insurance has stopped non-medical underwriting for three months as it seeks fresh capital injection.
Through internal communication to staff, the insurer’s acting Managing Director Bernard Githinji said there have been “significant delays” in raising the capital, making it difficult to continue underwriting covers beyond medical.
He said they expected the money by end of December but the delay by over three months had exposed the company to heavy working capital constraints.
“General insurance business has experienced delayed settlement of claims and non-establishment of requisite reinsurance treaties.
This exposes the policyholders and the company to huge cash flow risks should a claim arise,” said Githinji.
“In consultation with the regulator (Insurance Regulatory Authority), it has been decided to stop underwriting of all new or renewing non-medical business with effect from March 27, 2022, for a period of 90 days.”
He said the move is a precautionary measure to safeguard the interests of policyholders while providing an opportunity to de-risk and restructure the general business books.
“I am hopeful that we will finalise on capital raising and take immediate measures to normalise operations and gradually rebuild customer confidence in the brand,” Githinji said.
Last year December, the company revealed that it was seeking a Sh2 billion shareholder capital injection to plug cash flow problems that had seen its customers turned away by some big hospitals for late settlement of bills.
The decision means Resolution, which was founded by businessman Peter Nduati in 2002, will stop motor vehicles, homes, travel, personal accident, professional indemnity and school insurance.