AAR, the medical insurance company has confirmed that it has already informed the insurance regulator-the national bank of Rwanda that it shall exit the Rwanda Insurance market when the policies of the last of its clients will have expired in February 2012.
A press statement sent to our newsroom that has been undersigned by the Group Chief Executive officer of AAR Holdings Limited, Njagi Gakunju, states that with effect from the 1st of February this year, the AAR Board took a decision to divest out of the Rwanda Insurance market and will not renew any clients or accept any new clients.
The statement continues to say that the insurance company has made arrangements to ensure that services to its clients continue to be provided un-interrupted as per contractual obligations until their policies with the company expire. According to the statement, the company had already submitted an exit plan to the National Bank of Rwanda in February this year and is in constant touch with them as it does everything to ensure that its exit from the market is as smooth as possible.
The statement then proceeds to give the reason for the exit saying that in October 2009, the regulator informed it of revised capital requirements for insurance companies which raised the level of Capital and Solvency requirements from 100 million Rwandan francs to 1 and 0.5 billion Rwandan francs respectively for short term business under which the insurance company fell under and that after exploring all its options, it became clear that its business was no longer viable.
According to the company, this was because unlike other insurance companies in the country who handle other classes of insurance risk, AAR only covers medical insurance and that reduces the scope for growth of its business to justify the increased level of capital.
AAR commenced operations in Rwanda in May 2005 providing health services both locally, regionally and internationally to its members. Contact FM, as always will be following the developments of this story and will keep you informed.