Nigeria has Sanlam’s fastest growing insurance business in Africa – Werth

Sanlam, one of Africa’s leading non-banking financial services companies, launched in the Nigerian market last year when FBN Insurance rebranded to Sanlam Life Insurance Nigeria Limited. HEINIE WERTH, chief executive officer, Sanlam Emerging Markets, speaks in this interview with CALEB OJEWALE and DIPO OLADEHINDE on the firm’s activities in Nigeria, Sanlam Group’s performance in its latest financial results, and expectations for the future. Excerpts:

Sanlam made an entry into the Nigerian market last September as a brand; what opportunities did you (and do you still) see in this market?

Sanlam’s ambition, as a group, is to be a leading pan-African insurance company or non-banking financial services player. Looking at it from that perspective, it means we have to be intentional about having a strong presence in all the big markets and economies across Africa, and when you look at it, Nigeria is high up on the list of importance to Sanlam.

Nigeria is a very important market for us; it is one of the biggest in Africa, and we believe in the prospects of Nigeria. With the youth population in the economy and with insurance penetration, there is a lot of upside potential.

Nigeria has the largest consumer market in Africa and also a very young population, yet 63 percent of these people (133 million people) were found to be in multidimensional poverty in a 2022 report by Nigeria’s statistical agency. How do you plan to gain acceptability and penetration with this challenge?

The way we tried to achieve this, as we announced last year, was through our cooperation with MTN, which gave us different ways of reaching a wider client base. The big challenge, however, is financial inclusion. We have to find products and distribution channels that don’t only serve the middle-income markets but other income markets as well. I think MTN can help us reach people in lower-income segments.

We also have to work with what we call voluntary group schemes because we believe that if we can work with people in the informal sector, we can also distribute insurance there.

We compete with big insurers and other big international brands in Nigeria, but we believe that we bring practical experience not only from South Africa but also from other markets.

Insecurity, inflation, and foreign exchange pressures are key issues Nigerian businesses—small and large corporations—worry about. How do you plan to navigate these challenges?

The challenges you listed are some of the things we experienced not only across Africa but also in India, and Malaysia. We understand that our consumers are under pressure, so we can’t just sell any product to any consumer at any stage; we have to recognise periods of high inflation and high interest rates.

We also understand that it is important to focus on keeping clients on the books rather than just adding new ones.

As a business, we are quite resilient to these types of difficult environments. The challenge then is really to find ways to keep clients on the books while still making insurance affordable.

AIICO Insurance, Custodian Insurance, AXA Mansard, and NEM Insurance are currently some of the biggest players in the Nigerian market. What do you plan to do differently?

Yes, you’re right. We compete with big insurers and other big international brands in Nigeria, but we believe that we bring practical experience not only from South Africa but also from other markets.

From time to time, we send our people from Nigeria to our other businesses in Africa, and that way, they can learn from one another.

What we bring that is a bit different is experience from different African markets. And I think this helps us navigate difficult times in the markets where we play, and Nigeria is no different from that perspective.

I know you say there are lots of people below the breadline, but it’s still a huge opportunity and a country that we believe in.

Some of the biggest challenges facing the acceptability of insurance products in Nigeria remain institutional exclusion, affordability, low awareness, irregular or little income, unemployment, lack of trust, too much required documentation, and high charges. How do you plan to battle these old foes?

Insurance penetration and insurance awareness are issues we face in all or most of the African markets. At Sanlam, we think creating awareness is not something we can do on our own; we have to do it as an industry, and we have to work with the regulators to raise insurance awareness. So it is a bit of a longer practice.

We also believe there is a need to establish the business first, and thereafter we work with the industry regulators to improve conversations around penetration and awareness.

We believe if you’ve got a good business, you adjust to the circumstances, and a good business should find ways to navigate itself through these types of challenges.

Read also: Sanlam life Insurance building confidence for Nigerians

Last month, Sanlam Life Insurance Nigeria and two other companies were granted permission by the National Pension Commission (PenCom) to execute federal government businesses. How will this impact your operations going forward?

I see this as an opportunity for us to scale, and it’s always good to work with government institutions. It is part of our business evolving in Nigeria to really grow to new heights. I think this will help to achieve that.

The Sanlam Group recently released its financial results, recording 8% growth in its key earnings metric. We would like to explore the possibility of getting some insights from you into how much the Nigerian subsidiary has contributed to this growth, and how much it is expected to contribute to future growth.

We don’t disclose the results per country, but overall, Sanlam is very pleased with its eight percent profit growth in a very difficult and challenging economic environment. Considering higher inflation, increased interest rates, and exchange rate volatility in a lot of the markets, I think overall, as a group, Sanlam is pleased with its results. In that context, we call Sanlam emerging markets, specifically African businesses.

I would also like to say that our Nigerian business is, at this moment, our fastest-growing insurance business on the African continent.

What measures have been put in place to cushion some of the shocks experienced in 2022 that could continue in 2023?

We expect 2023 to be another difficult year. Not only across the African continent but across markets. The dollar is strengthening, and with interest rates, there is no certainty that it has reached the top yet. Overall, we are prepared for a difficult year.

I’ve referred to the fact that our diversified portfolio across countries and product lines helps us a lot. Unfortunately, there are weather events. We had some big floods in South Africa last year, which impacted the general insurance results and led to higher inflation.

Unfortunately, you have to reprice and keep your pricing relevant in these higher inflation environments. So I think it’s about us having to look at our cost side of the business, and pricing to clients. In the end, we can’t pass everything on to the clients, but we have to ensure we adjust our business to take cognizance of this environment.

Even though we expect a challenging year, as a group, we think we should be well positioned to weather any storms across different markets.

Over the next 10 years, what are your growth plans for the Nigerian market?

I think we’ve already got a very good life insurance company on the ground. So it is about taking it to another level and continuing to grow it into different market segments.

I do think we are not where we should be when we look at the general insurance side. We’ve got a general insurance business, which is a subsidiary of life insurance, but we believe there is more scope.

We need more focus on the general insurance business to also become a meaningful player in the general insurance market in Nigeria. Ultimately, it’s more about gradual growth and evolution than anything specific.

Apart from the insurance sector, in what other sectors of the Nigerian economy do you see growth opportunities?

For the short and medium terms, our focus is really on our current businesses. We are not in a hurry to have more product lines. We want to do the life insurance and general insurance that we do in Nigeria properly before we look at the other lines.