With the support of South African Sanlam, Allianz aims for first place in Africa

AXA will have a new strong competitor in Africa. Its German rival Allianz and the South African insurance giant Sanlam announced on Wednesday their intention to unite in Africa to create “the largest pan-African player in non-banking financial services on the continent”.

After two years of negotiations, the two insurers announced on Wednesday that they would combine their activities in 29 African countries. South Africa, Sanlam’s birthplace, is excluded from the joint venture, as was Namibia initially.

“Africa has enormous growth potential,” Allianz boss Oliver Bäte said at the group’s general meeting on Wednesday. But insurance market penetration is comparatively low. This penetration rate was 3% in 2020, according to a report by consulting firm McKinsey.

“In line with Sanlam’s stated ambition to be a leading pan-African financial services group, the proposed joint venture will allow us to take an important step towards realizing this ambition,” said Paul Hanratty, CEO of Sanlam. a giant of 154,000 employees present in 33 African countries.

The joint venture “follows other recent efforts by Allianz to expand in Africa,” notes Jefferies analyst Philip Kett. Present since 1912 on the continent, the German insurer has more than 2,000 employees and 1.7 million customers.

About 2 billion in capital

After slowing down its activities in West Africa, Allianz has consolidated its presence in the East and the Maghreb in recent years by taking over activities from Zurich in Morocco in 2016, the company Ensure in Nigeria in 2017, a stake of 8 % in Africa Re in 2018 and buying Jubilee in Kenya last year.

With the South African Sanlam, which recorded 354 billion South African rand in premiums in 2021 (21.2 billion euros), Allianz is taking a further step. Their future entity will have equity of around 33 billion rand (2 billion euros) and will be 60% owned by Sanlam.

Allianz remains in the background but offers the full range of its solutions. This combination should make it possible to offer “greater economies of scale, a larger geographical presence, a larger combined market share and a more diversified product offering”, explain the partners.

Axa Rivalry

In an aging world, “Africa is an underestimated growth opportunity,” explains the Jefferies analyst. Very unevenly distributed, the market is dominated by South Africa, which accounts for 70% of premiums on the continent. It is also disparate in terms of products, with for example a 98% share for non-life insurance in Angola but only 20% in South Africa, says McKinsey.

The German and the South African will not be alone in this market where they must also compete with very dynamic “insurtechs”. Present in around ten African countries, AXA has joined forces with Baloon in West Africa to distribute its offer. The French group, whose African activities are headed by Hassan El-Shabrawishi, has more than 6,000 employees on the continent.

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