Africa
ON TARGET FOR GROWTH
The four largest European reinsurers have maintained a presence in Africa for some time. Yet for new players moving in, despite all the opportunities and potential for Intelligent Insurer investigates.
L
arge corporate risks dominate broker business managed through international programmes in Africa. In terms of importance, South Africa remains the most developed market by far, which explains why most global companies targeting Africa form their
subsidiaries there.
In many ways, the appeal of the region is obvious. It has recorded stable economic growth of 5 percent a year since 2011 and per capita GDP of more than $1,000 in 23 countries.
Sunkara Rao, CEO and managing director of GIC Re South Africa Ltd,
insurance markets are growing at a rate of more than 10 percent annually with a cession rate of more than 30 percent. What is more, many insurers are actively seeking reinsurance capacities. “And insurance penetration is very low, which can be leveraged,” he says.
refusal on business.
Peter King, managing director at broker CKRe, explains that despite the
whether further growth will materialise any time soon.
“The country has done so much infrastructural development that it’s now looking outwards and using some of its wealth, power and experience to invest heavily in various external institutions, whether that’s business, industrial or commercial,” he says.
“But if you look at Africa as a trading block, which we have for some years
now, they will have to depend on that extra kick-start to their economies and still depend on large foreign investment for these big infrastructural improvements.”
big American and European banks want companies they know and trust
26 | INTELLIGENT INSURER | Spring 2015
A UNITED FRONT The market within Africa is also becoming interconnected, with more cross- border regional business being seen, according to Deniese Imoukhuede,
“National reinsurers have historically been focused on their own core
recently in the Francophone market,” she says.
Rao explains that with the formation of trade bodies such as the Southern Africa Cross Border Traders’ Association (SACBTA) with backing from intergovernmental organisations such as the Southern African Development Community (SADC), there is an optimistic outlook for inter-nation trade.
King says that he also sees a lot of cross-border cooperation between countries, as younger presidents show more passion for their countries within the framework of Africa.
“It is phenomenal compared to the situation we had 30 years ago,” he
says. “Whether they are French or English-speaking, everybody seems to be marching forward with a common purpose, and it is technology and education that makes all this possible.”
The reality is, however, that domestic African reinsurers do not have the size, capacity or underwriting expertise to retain a lot of business. This is also a in attempts to develop local capacity, as Carlos Wong, senior director–analytics
“They call these initiatives local content laws. Given the size of the companies and the size of the risks, it is impossible for local reinsurers to meet their target,” he says.
a small portion of it and ceding the rest to international markets. We have also seen a trend where pools are being set up in order to achieve a degree of economic liberalisation in the market.”
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