What started Monday night as news of the abrupt closure of Directline Assurance Company has revealed the intensification of a long-standing war between Royal Media Services owner SK Macharia and the Kenyan insurance regulator over the ownership of the company that controls nearly 70% of the local PSV insurance business.
In a statement aired by Citizen TV on Monday night, Macharia, in his capacity as chairman of Royal Credit Limited, stated that the insurance company had ceased operations and terminated its staff contracts.
He added that all assets owned by Directline would be taken over by Royal Credit.
Macharia attributed this move to the closure of all Directline Assurance bank accounts by the Insurance Regulatory Authority (IRA).
He also blamed the IRA for failing to take action against former directors of Directline, whom he claimed embezzled more than Sh7 billion from the company.
SK Macharia and the IRA have been fighting for the past week or so. The regulator obtained orders to freeze the company’s accounts pending the hearing of a case where the IRA is seeking to prevent the transfer of Directline assets to a third party.
It has been reported that on May 15, 2024, Macharia sought to transfer Sh400 million belonging to Direct Assurance to a real estate company he owns. This attracted the attention of a whistleblower who alerted the IRA, triggering a five-year dispute between Macharia and the regulator over conflicting shareholder records.
Minority shareholder
The IRA describes Macharia as a minority shareholder with a 10% stake in the company, which does not entitle him to call the shots in the company. On the other hand, Macharia describes himself as the majority shareholder.
The regulator, in a petition filed on June 4, stated that Directline had breached its permit, which bars the company from engaging in business outside of insurance.
The case will be mentioned on June 18.
On Tuesday, IRA chief executive Godfrey Kiptum dismissed Macharia’s attempt to close Directline, stating that the IRA has the sole authority to approve, suspend, or cancel the operations of any insurance company in the country.
“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,” said Kiptum.
“The purported transfer of assets of the insurer to any third party is therefore null and void. Policies issued by Directline Assurance Company Ltd. remain in full force and effect, and the insurer remains liable for any claims arising therefrom.”
- IRA revokes closure of Directline Assurance Company
- Directline fires all staff as operations come to a halt
- SK Macharia seeks control of grandson’s multi-million inheritance
Directline Assurance was founded in 1998 by Macharia’s son, John Gichia, who died in a road accident in 2018.
The company, now holding nearly 70% of the PSV insurance market, was the centre of a heated succession battle in 2021 involving Macharia and others, including his grandson, Adam Kamau Macharia, who was then 17 years old.
Macharia went to court seeking orders to become his grandson’s guardian and to take over the management of his inheritance.
What was at stake included Sh389 million in life insurance, a pension payout to the grandson, and a multi-million estate left behind by Gichia, who, according to court documents, had no relationship with his father at the time of his death.
Macharia asked the court to appoint him as guardian to Adam jointly with his mother, Lisa Anyango Amenya, and appoint him solely as the guardian of the estate of his grandson.
Under Section 38 of the Law of Succession Act, Adam is designated as the heir to his late father’s property. This inheritance encompasses 600,000 shares in AKM Investments Ltd., which owns various assets such as Kyuna estate, Mugumo Estate, and Kibarage estate.
Additionally, he inherits 3.7 million shares in DirectLine Assurance, 500 shares in Serenity Media Productions, 350 shares in Big Five Conservancy, 500 shares in Bushfire Media Distributors, and shares in Big Five Lotto, Toi Development, and Harbour Capital Limited.
Macharia argued that as the grandfather of the minor, he was well-placed to serve as the guardian of both the minor as a person jointly with the mother and also as a guardian to the minor’s estate.
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