Grace Ashiru
Kenya’s Directline Assurance’s shutdown is allegedly tied to an attempt by media mogul Samuel Kamau (SK) Macharia to evade a probe into an unauthorized $3 million (KES400m) transfer to a company he controls, according to court filings by the Insurance Regulatory Authority (IRA) reviewed by TechCabal.
The court documents reveal that $3 million was transferred to Toy and Suna Holdings Ltd from Directline’s Diamond Trust Bank account on May 16. The regulator claims that this transaction was a scheme to defraud the company’s policyholders and beneficiaries.
Samuel Macharia’s office did not immediately respond to a request for comments.
The Insurance Regulatory Authority (IRA) has accused Macharia of relocating millions “allegedly to fund the development of stalls and low-cost housing at the Toy Market,” which violates existing regulations.
“Section 191(2) of the Act forbids insurers from engaging in any business other than the one for which they are licensed. It is evident from the records that the transaction in question is not related to insurance and, therefore, constitutes a breach of the insurer’s license terms,” stated the IRA in its application.
A source with direct knowledge of the situation claimed that Macharia, affectionately known as SK, quickly shut down the insurer after the regulator flagged the transaction and subsequently took legal action.
“The board of Directline has been dissolved, and all assets have been taken over by Royal Credit Ltd. All employees have been dismissed, and Directline will cease issuing insurance services,” Macharia announced on Citizen TV, a prominent Kenyan news outlet he owns through Royal Media Service (RMS).
The unexpected closure caused panic among policyholders, who faced the potential loss of $15.4 million (KES2 billion) in unpaid claims, and left staff and agents in a state of uncertainty. The Insurance Regulatory Authority (IRA) intervened and reversed the decision.
“The purported actions are null and devoid of any legal effect and as such the insurer continues in full operation as licensed and approved by the Authority. The purported transfer of the assets of the insurer to any third party is therefore null and void ab initio,” stated Godfrey Kiptum, the chief executive of the IRA.
This latest standoff is just one of several disputes Macharia has had with the regulator and other directors in the company. Since 2018, the IRA has asserted that the billionaire and his associates do not own a controlling stake, a claim he contests.
According to the IRA shareholder register, Macharia, through RMS, owns 10% of the underwriter, while four other investment vehicles each hold a 20% stake. In 2019, Macharia challenged this position in court, asserting that his family owns 20%, while AKM Investments, a company owned by his son who died in 2018, holds a 48% share.
However, Macharia’s claim violates the regulator’s shareholding limit, which caps individual stakes in insurers at 25%. The matter is still pending in court.
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