Process and challenges in the merger between Apollo and Pan Africa General Insurance Companies

Abstract

A lot of mergers took place in the banking industry in the recent past whereby smaller banks have been merging together after the Central Bank of Kenya made regulations about the minimum capital requirements for each bank. No such regulations have been made by the commissioner of insurance but his office has been encouraging mergers in the insurance industry. The merger between Pan Africa General and Apollo Insurance Company was the first one in the recent past in the insurance industry. So it was considered important to study this merger so that other players in the industry could benefit from its experience. The main objectives of this study were:- l . To establish the factors that influenced Pan Africa General and Apollo Insurance Company to merge together. ') To identify the key merger processes undergone during this merger. 3. To identify the challenges encountered after the merger. The data was collected by in-depth interviews of 11 executives of the newly formed company- APA Insurance Company by usmg an interview guide. The results clearlv showed that lack of internal capacity to manage general business. lack of technology & marketing skills on the part of Pan Africa General were the main factors which influenced this company to look for a strategic partner to merge with. Aspiration of the owners of Apollo Insurance Company to grow and expand into new markets and products was also the main contributory factor for this firm to merge with Pan Africa General. The processes undergone were' followed professionally. Apollo Insurance Company emerged as the dominant party. The integration process was also led very professionally by the CIO who was also the CEO of the new company. Two main challenges faced by APA Insurance Company which came out very clearly were the cultural differences and the differences in the working practices and conditions of the. employees of the two merging partners. However, the efforts to resolve the differences have born fruit and after one year of merger, people seem to be comfortable . working in the new environment. It is recommended that a prospective study about the financial performance of this merged company be conducted for the next few years to see if this merger was helpful in creating wealth for the shareholders of the two merging partners