Insurance firms in Nigeria are fast taking to mergers
& acquisitions to bolter capacity, as competition from local rivals hots up
and foreign players begin to join the fray.
Already sizeable operators are merging &
acquiring to get even bigger, while the smaller players are getting jittery
about their prospects in the midst of rivals who are growing increasingly
muscular.
Within the last two years, a number of
successful mergers and acquisitions have taken place. The latest are the AXA,
believed to be the world’s biggest insurance company, taking over majority
stake in Mansard Insurance; Greenoaks Global Holdings taking over 92.8 percent stake in Union Assurance
Company Limited. FBN is also concluding the acquisition of Oasis Insurance.
Before now, Old Mutual Group of South Africa
acquired Oceanic Insurance belonging to Eco Bank. Other foreign players like
Sanlam of South Africa invested in FBN Insurance; NSIA invested in ADIC
Insurance; Metropolitan Life invested in UBA Metropolitan.
Within the local market also, are key
acquisitions seeing the likes of Custodian and Allied taking over Crusader plc;
ARM taking over CrystaLife; Capital Alliance taking over Spring Life.
Analysts who spoke to BusinessDay last night
on the merger and acquisition spree, said more consolidations are expected in
the coming years, as fringe players would be eaten up by the competition, as
well as by new policy direction, likely to come from the industry regulator.
The analysts say this will become more serious,
with the growing interest of government in the insurance industry, following
its desire to make the sector contribute more meaningfully to economic
development.
Government recently set a new growth agenda
for the sector, expecting the industry to generate a minimum of N1 trillion in the next three years and N5 trillion
in ten years, according to finance minister, Ngozi Okonjo-Iweala.
Abiola Ojo-Osagie, senior partner and
managing director, AfricInvest Capital Partners, said in Lagos that AXA’s entry
into the Nigerian economy through the Mansard Group, portends more FDI inflows
to the country.
Describing Mansard as among the strongest and
most profitable insurance companies in Nigeria, Ojo-Osagie said AfricInvest
sought to leverage on the company’s strengths to build a world class
organisation and deepen insurance penetration in Nigeria and also in Anglophone
West Africa.
Sam Evans, Global Insurance Transactions and
Restructuring Lead, KPMG International, said in a recent report, that as
insurers seek to secure profitable growth, enter new markets and rationalise
non-core operations, mergers and acquisitions are an increasingly important
element of the overall strategy.
The report identified ten trends for M&A
activity for insurers, including opportunities created through dramatic shifts
in technology use; Increasing activity and competition from private equity and
non-corporate acquirers.
The report highlights the opportunities in
Africa, Turkey, and the Middle East as also attracting attention. “We expect to
see a new horizon of high growth markets with countries in Africa and the
Middle East attracting significant interest, prompting a rapid increase in
mergers & acquisition and
distribution related transactions,” said Evans in the report.
MODESTUS ANAESORONYE
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