Africa Re MERGERS & ACQUISITIONS WITHIN THE INSURANCE INDUSTRY … · · 2016-05-25MERGERS & ACQUISITIONS WITHIN THE INSURANCE INDUSTRY N AFRICA Corneille Karekezi, ... Ease of

African Reinsurance Corporation

1

MERGERS & ACQUISITIONS WITHIN THE INSURANCE

INDUSTRY N AFRICACorneille Karekezi, GMD/CEO of Africa Re

Cape Town, South Africa, October 27, 2014

Africa Re

Presentation PurposePresentation Purpose

To discuss the trends and role of Mergers and

Acquisitions (M&A) in the development of

the insurance industry in Africa.

2


1. Purposes, Definition & Classification of

M&A

2. Growing M&A Activity in Africa

3. Examples of Recent Transactions Across Africa

4. Trends Impacting M&A in Africa

5. Outcome of M&A in Africa3


Purposes of M&APurposes of M&A Build internal capacity

Increase market share

Cross boarder expansion

Expand distribution channels

Grow existing business when organic growth is becoming difficult

Diversification of risk (catastrophic, lawsuit…)4


Definition of M&ADefinition of M&AMERGER: Amalgamation of two or more companies to form a single larger or efficient company.

ACQUISITION: Transaction in which one company takes control over a part or all of the assets of another company either directly or indirectly by controlling the management of the company.

M&A can be friendly or hostile

Mergers tend to be more expensive than acquisitions5


Classification of M&AClassification of M&AHorizontal M&A: Insurer merges with or acquires another

insurer (same industry, same offerings)

Vertical M&A: Reinsurer merges with or acquires an insurer / Insurer merges with or acquires an insurance broker (same industry, complementing offerings)

Congeneric M&A: Insurer merges with or acquires an asset management company (same industry, different offerings)

Conglomerate M&A: Insurer merges with or acquires an hotel (different industries)

6


1. Purposes, Definition & Classification of M&A




5. Outcome of M&A in Africa

7


Growing M&A Activity in Africa Growing M&A Activity in Africa

8


M&A Activity in African Countries M&A Activity in African Countries

9


Morocco

African Reinsurance CorporationPlot 1679, Karimu Kotun Street, Victoria Island, Lagos - Nigeria

Kenya

Côte d’Ivoire

Mauritius

South Africa

Tunisia

10

Intra-African M&A Activity in

Insurance on the Rise

Intra-African M&A Activity in

Insurance on the Rise

Nigeria



3. Examples of Recent Transactions Across

Africa


5. Outcome of M&A in Africa11


Recent Transactions – West AfricaRecent Transactions – West Africa

12


ACQUIRED COMPANY INVESTING COMPANY

1 Crusader Insurance Plc., Nigeria Custodian & Allied Insurance Plc., Nigeria

2 ADIC Insurance Ltd, Nigeria NSIA, Côte D’Ivoire

3 Oasis Insurance Plc. , Nigeria FBN Insurance Co. Ltd, Nigeria

4 Oceanic Insurance Company Ltd., Nigeria Old Mutual, South Africa

5 Intercontinental Wapic Insurance Plc., Nigeria Access Bank Plc., Nigeria

6 Fin Insurance Company LTD., Nigeria African Capital Alliance (ACA), Nigeria

7 Crystal Life Assurance Plc., Nigeria ARM Ltd, Nigeria

8 Provident Life Assurance ltd., Ghana. Old Mutual Insurance, South Africa

Blue Color means Foreign Investment

Recent Transactions – East AfricaRecent Transactions – East Africa

13



1 Mercantile Insurance Company, Kenya Saham Group, Morocco

2 Phoenix Assurance of East Africa, Kenya Union Insurance of Mauritius

3 Cannon Assurance Limited, Kenya Metropolitan Insurance, South Africa

4 CORAR, Rwanda Saham Group, Morocco5 Century Insurance Company, Tanzania UAP Insurance, Kenya

6 Real insurance Group, East Africa BRITAM, Kenya

7 SOCAR, Burundi SORAS, Rwanda8 SORAS, Rwanda Sanlam Emerging Markets, South Africa9 COGEAR, Rwanda Green Oaks, USA


Recent Transactions – African Indian Ocean islands

Recent Transactions – African Indian Ocean islands

14



1 Mauritian Eagle Life, Mauritius Metropolitan Group, South Africa

Recent Transactions – Central AfricaRecent Transactions – Central AfricaACQUIRED COMPANY INVESTING COMPANY

1 Colina Group Saham Group, Morocco

2 SIDAM, Ivory Coast Tunisian Investors, Tunisia


Recent Transactions – Southern Africa

Recent Transactions – Southern Africa

15



1 GA Seguros, Angola Saham Group, Morocco

2 GA Seguros, Mozambique ABSA Group, South Africa

3 Emerald Insurance Coy and EmeraldRisk Transfer, South Africa

SANTAM Insurance Company, SouthAfrica

4 Guard risk Insurance, South Africa MMI Holdings Limited, South Africa.

5 Canon Assurance, South Africa MMI Holdings Limited, South Africa.

6 One Insurance Co., South Africa Mutual & Federal, South Africa







16


Trends Impacting M&A in AfricaTrends Impacting M&A in Africa

17


1. Fast Growing Economies & Insurance Markets

2. Ease of Doing Business

3. Growing Middle Classes with higher revenues

4. Improving Political & Economic Governance

5. Stable Economic & Manageable Political Environments

6. Regulatory Change: Openness for Business

7. Disposal of Assets by First Generation of Entrepreneurs

8. Divestment by Development Finance Institutions &

Investment Funds who have reached their investment

horizon time

Fast Growing Income: Africa Re CaseFast Growing Income: Africa Re Case

18


3866

198

331

401

536

631670735

US

$ M

illio

n

CAGR in US $ = 19%CAGR in Local Currencies = > 25%

Ease of Doing Business Index 2013Ease of Doing Business Index 2013

19


29 20

148

3235 41

81

5152

56

0

20

40

60

80

100

120

140

160

2008 2009 2010 2011 2012 2013 2014

Rank

ing

Mauritius Rwanda South Africa Tunisia Botswana

Some Countries are improving dramatically

Extreme Case: RwandaExtreme Case: Rwanda

20


Local Insurersin 2006

ForeignAcquisitions since by …

New ForeignEntrants since

2006

New Local Insurer

1. SONARWA IGI Plc, Nigeria 5. UAP, Kenya 9. RADIANT, Rwandese

2. SORASSanlam EmergingMarkets, South Africa

6. BRITAM, Kenya

3. COGEAR Green Oaks, Switzerland

7. PHOENIX, Kenya

4. CORAR Saham, Morocco 8. AAR HealthServices, Kenya

Only One Insurer (out of Nine) is owned by Local Investors !

Future Trend of M&A in AfricaFuture Trend of M&A in Africa

21


1. Acceleration

2. International Consultants are Busy Consulting

3. All the Global European Insurers / Reinsurers are Concocting

an Expansion (Invasion) Plan in Africa

4. What About Chinese? Asians? Middle East (Qatar, UAE)?

South American (IRB Brasil Re)? US (AIG in Casablanca

Financial Centre)? Other Emerging Countries? Intra-African

M&A?

Get Used to This Press ReleasesGet Used to This Press Releases

22


Nairobi, Kenya – 8 October 2014 –

LeapFrog Investments sells stake in Kenyan insurer Apollo to Swiss Re

LeapFrog Investments has agreed to sell its minority stake of 26.9% in Apollo Investments Limited, a leading East African insurance group, to Swiss Re.

LeapFrog Investments has sold its minority stake in Apollo Investments Limited to Swiss Re.






23


Outcome of M&A: Alignment with Africa Re Mission

Outcome of M&A: Alignment with Africa Re Mission

24


1. Mission defined in 1976

2. Forster the Development of the Insurance and Reinsurance

Industry in Africa

3. Promote the Growth of the National, Regional and Sub-

Regional Underwriting and Retention Capacities

4. Support the Development of the African Economies through

Retention of Reinsurance Premium and Re-Investment of the

Funds

Outcome of M&A in AfricaOutcome of M&A in Africa

25


1. Foreign Direct Investment (FDI) in Target Countries

2. Transfer of Expertise (staff, product, management, IT

systems, etc.)

3. Transfer of Governance (policies, practices, culture, etc.)

4. Large (Pan African) Group of Insurers (Saham Group,

Morocco, NSIA, etc.)

5. Increased Competition / Competitive Landscape Changes

6. Increased Capacity = Increased Insurance Penetration?

7. Economic Integration through Private Investment

26


THANK YOU

Documents

Africa Re MERGERS & ACQUISITIONS WITHIN THE INSURANCE INDUSTRY … · · 2016-05-25MERGERS & ACQUISITIONS WITHIN THE INSURANCE INDUSTRY N AFRICA Corneille Karekezi, ... Ease of