In­sur­ers tar­get Africa

Finweek English Edition - - COMPANIES & INVESTMENTS -

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

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