Foreign insurers as well as private equity (PE) investors are taking stronger position in the nation’s insurance industry, with a new trend for total ownership in firms where they have equity stake.
Market analysts, who have watched the trend after about three major deals were concluded recently, say the attraction is the low penetration of insurance currently standing at less than 0.4 percent, lagging behind South Africa, Egypt and Kenya.
They also believe that the country’s large population put at over 180 million with larger proportion in the middle class presents a huge opportunity for growth.
Recently, Allianz Group offered to purchase all outstanding shares in Allianz Nigeria currently not held by Allianz through a ‘Scheme of Arrangement’.
After receipt of the approval of the Nigerian Securities and Exchange Commission (SEC) for the transaction and the approval of the court, Allianz Nigeria will become a wholly-owned subsidiary of the Allianz Group and its shares will no longer be tradable on an over-the-counter securities exchange in Nigeria.
Coenraad Vrolijk, regional CEO of Allianz Africa who disclosed this, says by increasing its investment in Allianz Nigeria, Allianz Group has once again demonstrated its commitment to the Nigerian market. “The privatisation of Allianz Nigeria marks the beginning of an exciting new era for the company,” Vrolijk states.
Also at Law Union & Rock Insurance plc, its majority investor, Verod Capital, a leading West African equity firm, has initiated moves to purchase the entire issued share capital of the company to which the company signed a Transaction Implementation Agreement through its investment vehicle, Kanuri LUR Limited.
According to the company, the shareholders have accepted the new investor’s offer of N1.23 per share for every 50 kobo ordinary share they held.
Remi Babalola, chairman, Law Union & Rock Insurance, notes that the offer represents a total value of N1.23 per share, a 129 percent of the last traded share price of the company on February 27, 2020, at N0.95 per share, being the last business day prior to the date of the execution of the agreement.
Also, Tangerine Life Insurance Limited, which had acquired 100 percent ownership of Nigeria’s Metropolitan Life, has also through the support of Verod Capital Management Limited, acquired a majority stake in ARM Life Insurance plc.
The acquisition, which became effective February 28, 2020, propels Tangerine Life to fourth place in Nigeria’s life insurance industry.
Livingstone Magorimbo, managing director of Tangerine Life, says, “The landscape of the insurance industry is evolving very quickly. At Tangerine Life, we have made a decision to ensure that we are always at the forefront of innovation within the industry. As part of that innovation strategy, we have found collaboration to be a key instrument in ensuring that we build and maintain a sturdy, profitable business.”
Magorimbo adds, “The acquisition will provide a perfect springboard for Tangerine Life to utilise the distinct strengths that ARM Life brings to bare, thereby strengthening the insurance services provided by Tangerine Life to create and deliver better value.”
Daniel Braie, managing director/CEO, Linkage Assurance plc commenting on the acquisition trend, states, “The potential for growth in our market is huge,” saying the low penetration of insurance given the population is a growth opportunity, and these investors are seeing it.
He says also that the Nigeria’s large population presents opportunity for retail market and that is the attractive factor for any investor in the industry.
