Allianz explains N10.7 billion investment deal with Ensure
…Plans to take big risks in energy, aviation, others
In a bid to grow Africa’s insurance market where several people are uninsured, Germany’s Allianz has concluded plans to acquire Nigeria’s Ensure Insurance Plc for $35million (N10.7billion) for 98 per cent stake.
“Nigeria is one of the most dynamic economies in Africa. The acquisition of Ensure Insurance Plc. gives us full access to this key insurance market in Africa and marks a major milestone for Allianz’s long-term growth strategy on the continent,” said the Regional Chief Executive Officer, Africa of Allianz SE, Coenraad Vrolijk.
According to him, “This new step of development will allow us to offer the best products and services to Nigerian customers in both personal and commercial lines. In addition, as we grow our excellent African teams, we are laying particular emphasis on hiring and developing local talent.”
Pending regulatory approvals, the transaction is expected to close end of 2017, when Ensure Insurance shall become a member of the Allianz Group.
Vrolijk explained that in Africa, Allianz is currently present in 17 countries, and accompanies clients in 39 countries. Its 1,500 employees achieved regional revenues of €600 million in 2016. Allianz also provides micro-insurance for 500,000 low income families and individuals in Africa.
The Nigerian insurance industry comprises of many small players that lack adequate capital to underwrite big risks in some sectors of the economy like Aviation and Oil and Gas. Also, insurance penetration in the country is still very low with less than 10 per cent of Nigerians having any form of cover policy.
In a proactive measure to boost the market, the industry regulator, National Insurance Commission (NAICOM), instituted a risk-based capitalisation programme, which ties the amount of risk in which a company can insure to the size of its capital base.
This has opened the market for foreign investors interested in growing premiums, as the Nigeria develops its infrastructure, as the consumer class demands protection from risks.
The policy has also led to a series of mergers and acquisitions in the industry. For example, South Africa’s Liberty Holdings acquired UNIC Insurance in a $12million deal, while United Kingdom’s Prudential, last month bought controlling stake in Zenith Life.
Describing the development as “a welcome development,” spokesman for industry trade group, the Nigerian Insurers Association (NIA), Davis Iyasere, also said it is “in the interest of the NIA to see investors coming into the industry with opportunities that would unlock its growth potential.”
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