Old Mutual Group plans to make acquisitions within the next five years to boost its market share in the West Africa region, where insurance penetration still has significant headroom for growth.
The market size is a key consideration for customers choosing insurers in the region, according to the head of Old Mutual’s West African operations.
“This is a market where if you are outside the leading companies, then you really struggle to get attention — not only from the corporate sector but also from the retail sector,” Samuel Ogbu, chief executive officer for Old Mutual West Africa, said in a telephone interview from Nigeria’s commercial hub, Lagos.
Established in 1845, Johannesburg-based Old Mutual offers general financial services — including underwriting, pensions and asset management — in about 17 countries, mainly in Africa and China.
In Nigeria, where its operations rank 15th in premium income, the insurer wants to become among the five biggest. With the planned acquisitions, it also wants to crack the top three in Ghana, where it’s now the fifth largest.
“We have held talks with several parties and we are likely to make acquisitions,” Ogbu said.
It is targeting companies in insurance and complementary business for a takeover in Nigeria. Meanwhile in Ghana it will probably acquire a pension company, Ogbu said.
The acquisitions, which will be subject to board and regulatory approvals, will enable the firm to boost its underwriting business in the two West African countries as well as migrate to other financial services in the region.
Nigeria, Africa’s largest economy, has one of the lowest insurance penetrations globally with just 1% of the population having any form of risk cover.
To boost insurance usage, the Nigerian Insurance Association, an industry body, is partnering with regulators to enforce compulsory covers for construction work, car accidents and group insurance for workers. Insurers are also being compelled to boost their capital to enable them to compete better.
“In Nigeria, I am encouraged by what the regulator is doing,” Ogbu said. “Our aim is to strengthen our position in Nigeria and Ghana to really grow and use those as a basis to penetrate the rest of West Africa over time.”
After the expansion, the West African units of Old Mutual aim to contribute 25% of the group’s return from operations generated outside of South Africa and China by 2030. Old Mutual plans to hire workers, deploy technology and take advantage of bancassurance to increase the number of retail customers, according to the CEO.