Foreign investors, Wapic in race to acquire Ensure Insurance
The Nigerian insurance industry landscape is about to witness another major change, as three international insurers, including Hollard of South Africa, Allianz of Germany and a local Nigerian company, Wapic Insurance Plc, are jostling to acquire Ensure Insurance Plc.
Ensure Insurance Plc, formerly Union Assurance Plc, was acquired three years ago by Greenoak Global Holding Limited of UK, a London based investment firm, focused on building market-leading insurance businesses in fast-growing frontier and emerging markets.
BusinessDay investigations reveal that the foreign companies are already talking with the owners of Ensure, outside Nigeria, for a possible acquisition, a few weeks after Zenith Insurance was acquired by Prudential, a major global insurer based in the United States of America.
The case of Ensure Insurance is even more interesting. This company was known as Union Assurance and not doing particularly well, but turnaround and positioned in just three years, and both Hollard of South Africa and Allianz of Germany are taking a serious look at it.
An industry source who prefers not to be named, says this brings, funding, capacity, skills and an enhanced image for Nigeria’s insurance industry, underscoring the great potential available in the local market, in which many international insurers are working hard to position in.
Mohammed Kari, commissioner for Insurance, says Nigeria’s vision 2020 Development Plan, describes the insurance sector as a gross untapped opportunity with low market penetration.
Kari says foreign investors, having noted these great opportunities, are attracted by the huge potential in the Nigerian insurances space.
“These investors are ready to position themselves for the future and so, have taken position in the industry and in partnership with indigenous companies for development and growth.”
Kari noted that three foreign acquisitions into the sector took place in 2014, two in 2015, five in 2016 and two acquisitions are now in progress.
In an email response from BusinessDay enquiries, Joe Macaulay, an insurance analysts, said these developments would lead to job creation in the industry. “It is estimated that given time and with sufficient support of the regulatory authority and government, not less than 100,000 jobs can be created within five years. This is because global players are very big on retail and the agency distribution model.”
Macaulay noted that underwriting capacity, which has been a challenge, will receive a major boost, “most of the companies in the industry don’t have the underwriting capacity to retain larger proportions of the risks they write.”
He says there is an outflow of premiums to the foreign markets, pointing out that these global insurers with deep pockets and shareholders’ funds will deploy greater capital to their Nigerian subsidiaries, thus increasing the ability of Nigerian businesses to retain more premiums.”
On human capacity, he said, “there is a skills gap in underwriting of special risks such as Aviation, Engineering and Oil & Gas, so with these global players, experience in appraising such risks will readily be passed to the Nigerian underwriters.
“Nigerians will experience a massive improvement in the quality of service they currently get from the insurance industry because these companies will introduce global best practices and systems.”
On corporate governance, Macaulay said “this is certainly one area that will receive a great deal of attention and positive impact. NAICOM will indeed be extremely happy at this development.
“On awareness, I see insurance uptake growing massively.With the very deep pockets of global players and the new competition, they all will spend a lot of money on marketing communications and advertisements. This is not only going to create more awareness, it will also create more opportunities for public relations firms and advertising companies too.
“Another area I see as positive for the industry, is product innovation”, he says, stating that these foreign companies will transfer knowledge and research-based information to help in product development.
At the last count, global insurance companies including the likes Old Mutual, Metropolitan Life, Sanlam; Greenoaks; NSIA; Saham; AXA; Liberty and SwissRe are already here in Nigeria.