Sanlam Emerging Markets says it is looking to expand into Zimbabwe in the next year or two after its Kenyan subsidiary made an acquisition in a short-term insurance business in the east African country.
Sanlam Emerging Markets said Kenyan subsidiary Pan African Insurance Holdings (PAIHL) had bought a 56% stake in Gateway Insurance Company for about $8m. The deal gives Sanlam an opportunity to sell the full gamut of nonbanking financial services in Kenya.
"Historically we have always been in Kenya. We had a life and asset management company ... We needed to get into general insurance," Sanlam Emerging Markets corporate development executive Thabied Majal said yesterday. Majal said the company had an option to grow its 56% stake in PAIHL to 60%, but would wait for the right time to do so.
The Sanlam Emerging Markets deal comes after Old Mutual Emerging Markets acquired a majority stake in UAP, the third largest general insurer in Kenya, in January for about $253m.
The acquisitions form part of a strategy by South African companies to tap into the higher economic growth and lower insurance penetration in the rest of Africa.
Sanlam Emerging Markets said gross written premiums in Kenya's short-term insurance industry have been growing at 20% per annum.
Previously Old Mutual has said insurance penetration in Kenya was low, at 3.16% of gross domestic product (GDP). The World Bank valued Kenya's GDP at $44bn in 2013.
"I think the obvious gaps for us "¦ we still need to do Zimbabwe. Zimbabwe is a key market for us and Angola is another market that we need to look at. We have now done the deal in Mozambique "¦ we need to get to Angola," Majal said in reference to Sanlam Emerging Markets' appetite to expand into Lusophone countries.
"We have to be in Zimbabwe. It's a matter of when. It's finding the right asset at the right price. I think Zimbabwe hopefully we will do it in the short-term in the next year or two and Angola in the medium-term."
Sanlam said earlier this month that it was looking to invest R3.3bn of its discretionary capital in acquisitions in the rest of Africa and southeast Asia.
Source: Business Day
