Africa Insurance: New Competition for South African Insurance Companies
Updated: Apr 6, 2020
South African Insurance Companies
More than ever, the Africa insurance market is thriving. With companies like Sanlam, Old Mutual, and Liberty who have already started expanding out of South Africa, into Africa; other global insurance companies are now looking at Africa as the next step for their company’s growth.
According to BD Live, PWC Director – Dewald van den Berg – has commented that despite the expansion into Africa, of the South African insurance companies, a new business has actually decreased by 7% for these companies, in the year 2014. He attributed this decline to a reduction in margins, strong competition, and volatile currency fluctuations.
The most successful South African Insurance Company, in Africa
Dewald van den Berg has also mentioned that of these South African insurance companies, Sanlam is the most successful at breaking into the Africa market thus far, with 22% of its new business coming from the “rest of Africa” operations. Sanlam was also able to maintain a constant level across their margins, for 2013 and 2014.
Currently, Sanlam holds the largest operations across the Africa insurance market as compared to other South African insurance companies, with businesses in 14 countries, outside of South Africa.
To spend on mergers and acquisitions within the African continent, Sanlam has a purse containing R2.5billion. Their aim for the year 2015 is to earn a net operating profit from business in the rest of Africa.
Old Mutual is listed both on the Johannesburg Stock Exchange (JSE) as well as the London Stock Exchange (LSE), with a mergers and acquisitions purse containing R1.4 billion for the ‘rest of Africa’, operates in 7 African countries outside of South Africa.
Dewald van den Berg commented on the Old Mutual market share and said that their ‘rest of Africa’ new business was made up of 14%.
The value of new business for Liberty in the ‘rest of Africa’ market is around 3% with operations spread across 15 African countries outside of South Africa.
The future for South African Insurance companies
South African insurance companies who are currently expanding and who are planning to expand into Africa had better do so quickly. Non-African Global Insurance companies are getting into gear for Africa expansion and to provide strong competition to the South African ‘Africa’ Insurance market. Insurance companies from the European markets, such as AXA and Prudential, which possess top-notch, up-to-date financials; are experienced in pricing risk, and maintain sophisticated models, are planning to take their business into Africa as well – this according to Victor Mugoto, PwC long-term insurance leader for Africa.
Victor Mugoto noted that these European Insurance companies have an advantage over South African insurance companies in that South Africa tends to avoid insuring infrastructure projects whereas, due to being able to underwrite more sophisticated risk, as well as being able to quickly pick up on new risk areas.
There is no doubt that the insurance market in Africa is booming but to get to the top of the Insurance market in Africa, your company needs to be a dynamic one with the InusraInsurancence skills tailored to the very specific needs of Africa.
The race has begun…
On your marks, get set, go!
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Social Media & Brand Communications Consultant for CA Global Group
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