Sanlam, Allianz tie-up may produce other tie-ups in Nigeria

BY PHILLIP ISAKPA

Africa’s biggest non-banking financial institutions, largely on account of their insurance businesses and presence in Africa, hence the biggest insurance company, recently emerged following the marriage between Allianz, already big globally and in Africa by its mere presence, and Sanlam, one of the old foxes in the business on the continent, and immediately focused attention of many on what the continent should be expecting following the combination.

While it is the entire continent that is now on the lookout for how and what the Allianz-Sanlam combination would unfold, the Nigerian insurance industry is salivating over what might still be. Allianz is in the Nigerian market and has been making a strong play in it since it settled down to do business. Sanlam is also playing deep in the Nigerian market and the decision to come together opens up room to speculate if two could soon become one since Sanlam is trading under a name that it can easily now discard. Time will tell, say analysts.

Sanlam is well regarded in Africa, being its largest non-banking financial services company. Allianz is a global player, one of the world’s leading insurers and asset managers and has been in Africa for at least a century. They both said they will be combining their current and future operations across Africa to create the largest Pan-African non-banking financial services entity on the continent. The key word is entity, not entities, which immediately gives away the fact that in Nigeria Sanlam-owned FBN Insurance and FBN General Insurance are heading for a tie-up with Allianz. This will be interesting to watch given that the Nigerian insurance market has defied different permutations to get it to wake up to its ‘responsibilities’, perhaps from slumber!

According to the two companies, there is the belief that the combination would offer their customers across the continent the opportunity to benefit from the expertise and financial strength of the two respected and well-known brands.

They explained that the joint venture will house the business units of both Sanlam and Allianz in the African countries where one or both companies have a presence, adding that Namibia will be included at a later stage, but that South Africa is excluded from the agreement. That’s understandable because South Africa is already a financially developed market. So is Nigeria at play here, as one major target out of many?

What more does the combination offer? Well, they have said, strong synergies. As they explained, “the combined operations of Sanlam and Allianz will create a premier Pan-African non-banking financial services entity, operating in 29 countries across the continent. The joint venture will be the largest Pan-African insurance player and is expected to be ranked in the top three, in the majority of the markets where the entity will operate. The entity is expected to have a combined total group equity value (GEV) in excess of 33 billion South African rand (approximately 2 billion euros).”

According to the two firms, “Sanlam and Allianz will leverage each other’s strengths to unlock synergies and provide customers with best-in-class, innovative insurance solutions and technical excellence. The joint venture will create value for all stakeholders through greater economies of scale, broader geographic presence, larger combined market share, and a more diversified product offering.”

They both noted that combining Sanlam’s expertise in Africa with Allianz’s global capabilities and insurance solutions, particularly for multinational businesses, they said their goal is to increase life and general insurance penetration, accelerate product innovation and drive financial inclusion in high-growth African markets.

“In line with Sanlam’s stated ambition to be a leading Pan-African financial services group, the proposed joint venture will enable us to take a significant step towards realising that ambition. It will also strengthen our leadership position in multiple key markets that are core to our Africa strategy, building quality and scale where it matters. We are delighted to have Allianz as partners and believe their expertise and financial strength will add tremendous value to our businesses,” Paul Hanratty, group chief executive officer, Sanlam Group, said.

In response, Christopher Townsend, member of the board of management, Alliaz SE, said: “In accordance with our enterprise strategy to expand our leadership position through scale and new partnership models, Allianz is pleased to accelerate its growth in this important region through a partnership with the undisputed market leader. Sanlam’s capabilities extend our local reach and market penetration, and the joint venture allows us to establish leading positions in key growth markets for Allianz.”

With the combination set in motion, it would be interesting to see what the game plan is for Africa’s largest economy, Nigeria, especially given that they are already in the market. How would these giants coming together shake and shape Africa’s biggest sleeping insurance market? Observers watch and wait to see.