The masters of Africa

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While everyone was expecting an offensive from major firms like AXA or Allianz, Sanlam, marking its territory, has by the same token asserted itself as the prevailing leader of insurance in Africa.

The acquisition of Saham stands as a masterstroke with multiple ramifications: It made of South African leader the number one insurer of the CIMA Zone, the third insurer of Morocco, one of the leaders in Angola, thus paving the way for the conquest of the Middle East. Sanlam has also entered the capital of Nigerian reinsurer Continental Re and that of SUNU, another major player in West and Central Africa.

In fact, Sanlam has managed to take advantage of the hesitation among major European insurance and reinsurance companies and their defiance to Africa. For over a decade, the South African insurance groups have not encountered any difficulty in occupying the space left up for grabs and free of any top-level competition. They are present, among others, in Namibia, Zimbabwe, Botswana, Mozambique, Rwanda, Uganda, Kenya, Tanzania, Zambia, Ghana, Nigeria, etc.

All ingredients seem to be made available today for merger-acquisition moves to pick up momentum. The conditions of South African domestic market are such that local insurers are compelled to seek prospects across border: poor turnover growth, difficulty in reducing costs, high loss experience, national currency in free fall.

As the record of South African groups remains solid, there is a strong case for external growth. Within this context, African market remains a natural hunting ground, easy to access and hardly costly. It is a bet on risk-free future.

Last finding: the acquisition of Saham marked the limits of some new African insurance groups. Major operations require not only huge capital but also know-how, technology and manpower. For the time being, only South Africa, politically accepted in all Africa, is endowed with all of these assets.

Atlas Magazine N°150, April 2018 [1]