Insurance: Sanlam-Allianz partnership reshuffles the cards in Francophone Africa

Several scenarios – ranging from a global alliance to the signing of several separate agreements depending on the geographical area – had been evoked in the African markets since the announcement, in December 2021, of the opening of discussions on the formation of a “strategic partnership” between the Munich-based colossus (revenue of €148.5bn [$156.1bn]  in 2021) and the African insurance leader ($9bn in revenue in 2020).

This joint venture will be the largest pan-African insurance player

Rotating presidency

“The joint venture will house the business units of Sanlam and Allianz in the African countries where both companies, or at least one of them, are present,” explained the German group, whose pan-African subsidiary, Allianz Africa, has been headed since November 2021 by Delphine Traoré of Burkina Faso.

“The combined operations of Sanlam and Allianz will create a leading pan-African non-banking financial services entity, active in twenty-nine countries across the continent,” the insurer added, indicating that “Namibia will be included at a later stage” and “South Africa is excluded from the deal.”

According to Allianz’s projections, this joint venture “will be the largest pan-African insurance player and is expected to rank among the top three in the majority of the markets in which it is to be present”. The equity value of the new entity is estimated at around €2bn.

The chairmanship of its board of directors will alternate every two years between representatives of each of the two partners. The appointment of a CEO should be announced shortly.

Several unknowns remain, including the timing of the deal, which depends on the approval of various regulatory authorities. “Until the deal is finalised (regulatory approvals and other prerequisites), our operations and processes will remain unchanged,” a source involved in the negotiations says.

“We will continue to serve our customers and partners as before. The two entities will continue to work separately. For now, we are focusing on the approval part,” the source concludes.

Worries for Axa, Sunu and NSIA

On paper, the new entity should upset the ranking of insurers in several French-speaking African countries. Indeed, since the takeover, in 2018, of Moroccan insurer Saham (since renamed), Sanlam and Allianz are neck and neck at the top of the list in several countries, including Cameroon, Côte d’Ivoire and Senegal.

In Cameroon, in the property and casualty insurance market, the alliance between Sanlam (9bn CFA francs [$14.4m] in premiums in this segment in 2019) and Allianz (19.9bn CFA francs) should enable them to overtake AXA, the current leader with 20.7bn CFA francs in revenue. Allianz is already number one in life insurance in the country.

In Côte d’Ivoire, Sanlam and Allianz are already the leaders in non-life insurance (with respectively, 56.8bn and 25.4bn CFA francs in premiums in 2019). In the life segment, the German group is number three (26.5bn) and Sanlam is number four, with 25.5bn CFA francs in premiums. An alliance between them would enable them to overtake Sunu (50.7 bn in life insurance revenue) and NSIA (30.2 bn).

The same is true in Seegal, where the companies’ combined weight would enable them to dislodge AXA from first place in non-life insurance and Sonam from its leading position in the life insurance segment.

The case of Morocco

In Morocco, where Wafa Assurance’s lead (18% of the combined life and non-life market in 2021) remains very clear, the new partners could get closer to RMA (15.4%) and take the lead over Mutuelle Taamine Chaabi (12.7%).

Sanlam is already ranked fourth (11.3% of the overall market) and is the leader in the non-life branch. Allianz Assurance Maroc, on the other hand, ranks far behind (ninth, with 2.9% of the overall market). Its revenue did, however, double between 2019 and 2021, rising to Dh302.7m ($30.2 m).