With insurance penetration in South Africa being one of the highest in the world, the economy growing slowly and consumer disposable income under pressure, making it difficult to grow premiums, South Africa’s insurers have been looking to the rest of the continent for prospects.
“The big four life insurers are looking to the rest of Africa as the main source for growth. While the contribution to profit from these ventures is small at this stage, they are profitable as a group. Looking forward, the rest of the continent will become a bigger contributor to local insurers’ bottom lines,” explained Loots.
Old Mutual, with operations in eight African countries including South Africa, aims to earn 15% of its operating profit from its non-South African operations on the continent by 2015, up from 10% in 2013. In 2013, it made acquisitions in Ghana, Kenya and Nigeria, which it sees as the key growth markets on the continent. Old Mutual added Faulu Kenya, Ghana’s Provident Life Assurance Company and Oceanic’s Life Insurance and General Insurance businesses in Nigeria to the group.
“There is an improved regulatory environment, institutional capacity is improving and profitability is becoming attractive – and all this is happening against the background of the African growth story, with a promised demographic dividend, rising income levels and fast-growing economies,” says Johannes Gawaxab, managing director of Old Mutual African Operations.