Private equity firms eye stakes in insurance industry

By: Modestus Anaesoronye

Private equity firms, both local and foreign, are now tapping into the nation’s insurance industry with a view to taking major stakes in the business, BusinessDay investigations have revealed.

At the last count no fewer than six private equity firms mostly from South Africa have taken key positions in the Nigerian market, and are gradually bringing to bear their experience and skills in the respective organisations where they have invested.

Latest arrivals on the scene are Asset and Resources Management (ARM) Limited with funds under management in excess of $2.7 billion about N436 billion, which recently bought a 52.2 percent equity stake in ChrystaLife Assurance plc, now called ARM Life; and Old Mutual of South Africa with $15 billion under management, which recently acquired Oceanic Insurance now called Old Mutual Nigeria.

Before now, we have had the likes of Sanlam of South Africa partnering FBN Life Assurance Limited, a member of FBN Holdings; NSIA Participation South Africa buying 96.15 percent in ADIC Insurance Limited; Alternative Capital buying majority stake in Law Union and Rock Insurance plc; Capital Alliance for Cornerstone Insurance plc while Metropolitan Life also of South Africa partnering UBA Life Insurance to become UBA Metropolitan Life.

The firms whose track record and pedigrees in financial services sector from within and outside Nigeria, analysts say, would bring key innovations in product development and distribution that would trigger insurance growth especially in the retail arm of the business.

"There is going to be a major transformation that would not only push up growth and quality of service delivery but also increase market penetration," says an analyst.

Owolabi Salami, chief responsibility officer, ARM Life commenting on the new development said that a major change is imminent in the Nigerian insurance industry.

"In a short while, you will begin to see funding, skills, technology, products, people, professionalism and innovations play critical role in shaping the industry. And I see retail business being the major beneficiary and that would mean a lot of penetration for our industry," Salami stated.

Ganiyu Musa, group managing director, Cornerstone Insurance plc said "this is a healthy development for our market because we need to increase penetration as much as possible."

Source: BusinessDay