Industry insiders said the proposals, which are expected to become law in June, could further pull the lever on trading at the Nairobi Securities Exchange (NSE) even as they tap an extra Sh200 billion to Sh400 billion into government debt this year alone.

The scale of the change looks set to deliver a seismic shock to the insurance industry itself, with an impact analysis from the Association of Kenya Insurers indicating that 49 per cent of insurers will be unable to meet the minimum conditions set by the new rules, and that just 11 per cent will be sufficiently capitalised to be free of regulatory intervention.

Equities listed on the NSE also carry a somewhat higher than normal risk factor, at 30 per cent, but government bonds, despite their current B rating, which defines them as high risk, carry no risk factor at all under the new regulation, and can be counted at full value.

Under the new regulations, and for insurers struggling to make the 200 per cent bar, equity and property holdings are set to become a distinct burden, worth 30 to 40 per cent more if they are sold and the money is rerouted into government debt.

For most insurers, property represents a long term investment, and few have yet reduced their portfolio holdings of property, although the regulation has already seen some retreat from new property investments.

But the industry, which now holds more than 40 per cent of its Sh370bn of investments in government debt, has been selling off its equity investments and shifting funds to government bonds.

From March to September, the industry moved some Sh11 billion from equity to government debt.

his conversion of equity to debt may not depress the stock market for much more than another year, with last year’s sell-off having already reduced the industry’s total equity holdings to around Sh42 billion by September after fair value losses.

Nonetheless, the sell-off appears to have continued since September, and many insurers that will fall under the minimum capital adequacy ratio of 100 per cent of their capital needs in June will have little choice but to convert their equity assets into government debt to gain 30 per cent in their available capital sum.

@Realtreaty results ni lini? Tell us please if you have any info. Results announcement will clear headwinds on this stock.

Whoever thought there was going to be any results been announced today was in dreamland.
Saa hii the dons of those companies have closed and started enjoying their easter holidays

You will be wowed by bonus issue from reserves to trigger a mammoth rally. Mauritian tycoons will sell during the announcement of the bonus to a global investor. Sub 8 mtangoja sana!!!&

We'll shaft prophets of doom at the peak of the rally. After exiting we shall be eyeing other counters gracing Britam massive capital gains!!!

So MSC burnt your fingers to recognition and now Britank plans your cremation! Symptoms of denial are all over.
Poleee lakini. It shall be well though I don't know when.

@Realtreaty results ni lini? Tell us please if you have any info. Results announcement will clear headwinds on this stock.

Great observation. @RealTreaty we need to be vigilant on the activities of the big boys! But I don't think they will exit. Major shareholders understand that in the long run this is value stock.

Atleast 1.2B kes profit will be announced. A more than 50% drop in FY 2015 PAT.

That money is enough for cash dividend or bonus issue.