BILLION-DOLLAR BET

Sanlam’s international expansion has been slow and incremental. At the time of listing 20 years ago, Namibia was its only sizeable life business outside SA. So the $1bn it has put down to take full control of Morocco-based Saham Finances looks uncharacteristically bold.

But Sanlam Emerging Markets (SEM) CEO Junior Ngulube says it provides the group with a footprint that competitors will find hard to match. There should be room for growth — even more developed countries such as Morocco and Kenya have a life insurance penetration of less than 1% and little more penetration in general insurance.

Combined, Saham and SEM are represented in 33 countries in Africa, and puts it in a strong position for multinationals looking for help with their general insurance, life insurance and reinsurance needs.

Ngulube says that not a single person has left either group as a result of the merger, and there was overlap only in three markets.

Saham is already meeting its return hurdle of 16%. As general insurance is the main product line in most of these countries, Santam has come in as a partner and owns an effective

10% of Saham.

Ngulube, a former head of Munich Re Africa, says that while Saham has been a strong personal lines insurer, it does not have the specialist expertise Santam has in sectors such as liability, engineering and commercial property. Ngulube says it will be critical to keep strong relationships with multinational brokers such as Marsh, Aon and Willis, which dominate corporate markets.

The other product line outside SA is retail credit, through Botswana-based Letshego and Shriram in India. It also has selected asset management interests such as Botswana Insurance Fund Management and the Sanlam business in Kenya, which includes the operation bought from multinational Pinebridge. Saham also operates a roadside assistance business similar to the Automobile Association. After the Saham takeover, the mainstream general insurance will be run out of Morocco by Nadia Fettah, the previous COO of Saham; Robert Dommisse will run the pan-african life business from Bellville.

Ngulube says the focus will be on Africa for now. There will be no more acquisitions in Southeast Asia, where the group owns a niche motorcycle insurer. But Sanlam has its eyes on two large markets in Africa: Egypt with 90-million people and Ethiopia with more than 100-million. Egypt is already quite a competitive market, and an acquisition would be possible.

But the Ethiopian financial sector isn’t yet open to foreign investment; Sanlam would like to be an early investor.