Sanlam, Allianz may consider acquisitions to break through in Nigeria, Ghana, Kenya

By David Whitehouse
Posted on Tuesday, 20 December 2022 10:30

Mike Hutchings/REUTERS

The African insurance venture resulting from the combination of assets between Sanlam and Germany’s Allianz may consider acquisitions to break through in markets with major potential, Emmanuel Brulé, CEO of Sanlam Pan Africa General Insurance, tells The Africa Report.

The goal is to be among the top three players everywhere where the venture does business.

“We will look at ways at getting into the top three” which could include acquisitions in Nigeria, Ghana and Kenya in either corporate insurance or the mass market, Brulé says, speaking on the sidelines of the African Financial Industry Summit in Togo in late November.

Sanlam and Allianz in May 2022 agreed to combine their operations across Africa to create the continent’s largest non-banking financial services business.

The merged entity, with assets of about €2bn, will operate in 25 countries, though South Africa, where Sanlam is based, is excluded.

The aim is to close the transaction in the third quarter of 2023.

  • It’s too soon to say whether the operation will lead to job cuts, Brulé says.
  • He is confident in the long-term outlook for the venture.
  • While higher inflation has affected business and 2023 will be a “tense” economic year for Africa in the context of an unclear global outlook, the rise of an affluent middle class will ultimately create a mass market for insurance.

MTN Venture

Sanlam’s aYO joint venture with MTN came into effect at the end of October.

aYO, in which the two companies each have 50%, is a micro-insurance fintech platform that targets 30 million customers by 2025.

Brulé is confident in the venture’s prospects, as MTN’s data will enable a closer understanding of client profiles which will be used to create new products.

aYO is active in Côte d’Ivoire, Ghana, Uganda and Zambia.

The next three countries to come into operation are Cameroon, Nigeria and South Africa.

Brulé argues that there has been a tendency in Africa for multinational insurers to try to sell standard products which have worked elsewhere rather than focusing on specific local market needs.

He sees a need to switch the focus of efforts and start with small, affordable policies.

  • Conversations with potential customers need to start with the dangers for which protection is needed, rather than the products themselves.
  • There’s a need to concentrate on “risk rather than insurance” he says.

The task of increasing corporate insurance in Africa has been complicated by higher prices for reinsurance, or the agreements through insurers themselves pass on some of their risks.

After a long period of soft prices, reinsurance rates, which are effectively set by half a dozen global players, have been climbing since 2018.

The increases so far have been “reasonable”, Brulé says, with Africa to some extent shielded because it has less exposure to catastrophe risks than the US and Europe.

Africa’s catastrophe risk exposure, he says, will increase over time.

Sanlam’s corporate insurance business is doing well, helped by a “one-stop shop” for business clients.

In the long term, the continent’s need for infrastructure will likewise favour the growth of corporate insurance, he adds. “Insurance is the oxygen of business.”

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