Insurers target Africa
The race for more insurance business in Africa has just picked up speed. Local insurance giants Old Mutual and MMI Holdings recently announced they’ve raised Africa expansion kitties of R5bn and R500m respectively. Old Mutual says Africa currently contributes 6% towards Old Mutual South Africa’s profit but has set an ambitious target of reaching 15% by 2016.
MMI is getting about 4% from its Africa operations with, surprisingly, Lesotho bringing in most of the money, owing to the long legacy of Metropolitan operating in that country.
MMI CEO Nicolaas Kruger concedes that the R5bn put up by his competitor for Africa does make him sleep uneasy but his company has built a base and can only grow from there. He says his board wants the R500m spent over the next two to three years to help contribute towards the Africa revenue contribution target of between 10% and 15% in the next three to five years.
Earnings from Africa operations are up 100% for MMI Holdings, (6 months to December 2012) albeit from a low base. Kruger says it may take a while, however, to invest the money as they need to find the right asset at the right price.
While most local insurance companies see opportunities and want to expand their operations to the rest of the African continent, getting there first can be a competitive advantage. Kruger agrees: “Competition to expand in Africa definitely exists among