Africa’s Insurance Sector Sees M&A Activity Step up

Pan-African reinsurer Continental Re is reported to be seeking deals in East Africa in a new wave of mergers and acquisitions (M&As) as well as share deals that could shake up the region’s insurance and reinsurance market.

The firm’s managing director, Olufemi Oyetunji, said the reinsurer has lined up several deals as part of its acquisition strategy to increase its market share in Africa, in addition to expanding its regional subsidiaries.

Several of the region’s insurance firms and financial services firms, led by Britam, the financial services group listed on Kenya’s Nairobi Securities Exchange (NSE), have been on an acquisition spree to consolidate market share and broaden revenue sources.

Britam acquired 99% of rival Real Insurance last December in a cash-and-share swap deal valued at 1.4 billion Kenyan shillings, or US$16.4m.

Meanwhile, South Africa insurer Sanlam has indicated that it plans to increase its stake in the NSE-listed Pan African Insurance Company.

Earlier this month, Sanlam said it had closed a deal to acquire a 50.3% stake in Niko Uganda as part of a deal that saw it acquire a 49% holding in Niko Group’s insurance business in Uganda, Malawi, Tanzania and Zambia.

Elsewhere, Moroccan investment company Saham said it had received the necessary regulatory approvals from authorities in Kigali to buy 66.7% of Rwandan insurance firm Corar SA for an undisclosed amount. Kenya’s Jubilee Insurance also said it is scouting for potential acquisition targets.

Continental Re said its planned deals aim to strengthen the company as part of ongoing efforts in Africa to increase the capacity of insurance and reinsurance companies. This, in turn, is to ward off dominant reinsurance companies, in particular those that control over half the business in Africa.

“It is important to strengthen local reinsurance companies. Africa must have strong and large insurance and reinsurance institutions so that we can keep African premiums in the continent,” said Oyetunji.

“We have entered into discussions with reinsurance companies in West Africa, East Africa and in Southern Africa. Additional offices will be opened in Tunisia in April and Botswana in May this year.”

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