Ex-MUA Kenya Chief Kibaara Battles Sh1.6 Billion Fraud Storm

Former CEO denies wrongdoing, accuses insurer of breaching separation deal as Sh1.6 billion scandal rocks Mauritian firm

A bitter legal war is brewing between former MUA Kenya Chief Executive Officer Lydia W. Kibaara and her former employer, following explosive revelations of a Sh1.6 billion fraud that has left the insurance subsidiary on its knees and begging regulators for a capital lifeline.

Kibaara, who left the insurer earlier this year under what she insists was a mutual separation agreement, now finds herself at the center of one of Kenya’s most significant insurance scandals in recent years, after MUA Group disclosed in September that it had uncovered hidden liabilities dating back to 2017.

Through her legal team at Danstan Omari and Shadrack Wambui Associates, the veteran insurance executive has fired back with both barrels, threatening to drag MUA and Business Daily newspaper to court for what she terms as a calculated campaign to destroy her reputation and career.

The explosive confrontation follows a September 23 Business Daily article that disclosed MUA Group’s Sh1.63 billion write-down after discovering hidden liabilities in its Kenyan subsidiary. But it is the claim that Kibaara was “dismissed” for fraud that has ignited a firestorm.

“These allegations are manifestly false. Our client was never dismissed; she left under the negotiated mutual separation agreement. She was never accused of fraud or impropriety,” Wambui stated in a demand letter that has sent ripples through the insurance industry.

At the heart of Kibaara’s fury is what her lawyers describe as a blatant breach of Clause 10 of her separation agreement with MUA, a non-disparagement clause that bound both parties to refrain from making statements that would bring the other into disrepute.

The clause, her legal team argues, was the product of “balanced, good-faith negotiation, culminating in an orderly and amicable separation.”

Yet MUA’s investor presentation painted a damning picture, revealing that between 2017 and 2020, reinsurance balances in the local subsidiary were “significantly overstated,” and stating that the findings led to the dismissal of the CEO.

The overstatement of reinsurance balances meant the company was recording higher-than-expected recoveries from reinsurers when in reality, it owed more.

The review confirmed that the insurer’s probable future payouts were higher than existing reserves in several cases, meaning it was setting aside too little money to pay for future claims.

In the breakdown of the Sh1.63 billion hit, MUA had to increase net payables to reinsurers by Sh507 million, raise case reserves by Sh539 million, increase incurred-but-not-reported reserves by Sh242 million, and impair goodwill by Sh340 million.

The scandal has left MUA Kenya in a precarious financial position.

The correction of errors has left the subsidiary requiring fresh capital injection to continue operating, prompting the parent company to open talks with the Insurance Regulatory Authority over recapitalization. In its investor presentation ominously titled “Out of the Storm,” MUA admitted that “Kenya remains fragile and requires recapitalization.”

But Kibaara’s lawyers are having none of it.

They argue that their client, who boasts a 27-year career in the insurance industry with senior roles at blue-chip firms including Britam and Jubilee Insurance before leading Saham Assurance Kenya, has been painted as the villain in a crisis that predates her tenure.

Kibaara held senior roles at Britam, Jubilee, and Saham Assurance before joining MUA , and her record has been free of disciplinary, criminal, or regulatory infractions .

The timing of the alleged fraud adds weight to her defense. MUA entered Kenya in 2014 by acquiring Phoenix of East Africa Assurance Company and renaming it MUA Kenya.

The local operation in July 2020 then acquired Saham Kenya for $12.325 million and integrated it into MUA Kenya.

The misstatements allegedly occurred between 2017 and 2020, a period that straddles multiple leadership changes and two major acquisitions.

MUA first raised red flags in March 2024, when it disclosed in a cautionary statement that provisional findings of reviews indicated understatement of liabilities in MUA Kenya’s accounts dating back from 2017 onward.

At that time, the firm stated the understatement would “not meaningfully affect the financial health nor solvency of the group.”

How things have changed.

The one-off adjustments in Kenya pushed MUA Group into a 266 million Mauritian rupees loss in 2023, reversing what had otherwise been a steady growth trajectory.

The costly liabilities triggered sweeping corrective measures including a forensic audit by PriceWaterhouseCoopers, leadership reshuffles in Kenya, and strengthened internal controls across East African operations.

The group also expanded its oversight of reinsurance and claims reserving, requiring external experts to review open claims annually.

Kibaara’s legal team has given Business Daily seven days to publish an unconditional apology with equal prominence and engage in good-faith negotiations on damages for breach of contract and reputational harm.

They have also demanded that MUA formally acknowledge breaching the separation agreement.

“The prejudice suffered by our client is grave. She has been portrayed publicly as dishonest and fraudulent, imputations that have caused her humiliation, distress, and untold reputational damage, both personally and professionally,” her lawyers stated.

When Kibaara engaged the newspaper about the publication, they claim Business Daily admitted the statements came from MUA but sought to qualify the matter by alleging they had “misquoted” or “misinterpreted” the company.

The insurance sector is now watching closely as this drama unfolds. For Kibaara, the stakes could not be higher.

A career built over nearly three decades hangs in the balance. For MUA, the question remains whether it can stabilize its Kenyan operations while managing the legal and reputational fallout from a scandal that has exposed serious governance failures.

MUA has initiated legal actions to recover part of the damages, but it may find itself fighting on multiple fronts if Kibaara makes good on her threat to sue.

The Insurance Regulatory Authority, which is now in discussions with MUA over recapitalization, has remained conspicuously silent on how such massive liabilities could have gone undetected for years, raising uncomfortable questions about the quality of oversight in Kenya’s insurance sector.

As the legal letters fly and battle lines are drawn, one thing is clear: this is a fight that will test not just the strength of separation agreements and non-disparagement clauses, but also the reputation of everyone involved.

In the unforgiving world of insurance, where trust is currency, both sides have everything to lose.