Kenyan insurance company Directline Assurance has ceased operations, citing financial mismanagement by previous leadership and a disagreement with the Insurance Regulatory Authority (IRA).
Directline terminated all employee contracts and dissolved its board.
Royal Credit Limited, chaired by S.K. Macharia, took over Directline’s assets. Macharia blames the closure on over Sh7 billion misappropriated by former Directline directors and accuses the IRA of failing to act.
“The board of directors of Directline has been dissolved and all the assets taken over by Royal Credit Ltd. All employees have been dismissed, and Directline will no longer issue insurance services,” Macharia said.
We found the clip that Citizen TV aired in which Royal Credit (RC) Chair Dr. SK Macharia allegedly announced the closure of DirectLine Assurance (DL):
—All DL employees dismissed
—Board of DL sent home
—All DL properties taken over by RC
—DL will no longer be issuing insurance pic.twitter.com/Zrt0p6maS4— Mwango Capital (@MwangoCapital) June 10, 2024
Directline has been a major player in Kenya’s motor insurance market, especially for Public Service Vehicles (PSVs).
The IRA has not yet responded to Macharia’s allegations.
The IRA alleges Directline transferred KES 400 million to a company owned by Macharia without proper authorization. IRA aims to protect policyholders owed KES 2.08 billion as of April 2024.
Impact
The closure of Directline Assurance disrupts the Kenyan insurance market. Consequently, Royal Credit’s takeover aims to mitigate financial impact but raises questions about policyholder protection.