Swiss Re Targets Nigerian Acquisition, Seeking to Tap African Growth Rates

Swiss Re AG, which has had an African presence for more than 60 years, said it’s in talks with Nigerian insurers to buy minority stakes and benefit from growth in the continent’s largest economy.

“We’d like to have more investments in places like Nigeria,” Frank O’Neill, Swiss Re’s chief executive officer for the Middle East and Africa, said Tuesday in an interview before the World Economic Forum on Africa in Cape Town. “The challenge is that the valuations are rich. We’re looking for the right kind of partners at a price that makes sense. We’re at an early stage in talks, but we’re positive on the market opportunities.”

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Swiss Re, the world’s second-largest reinsurer, bought a minority stake in Kenya’s Apollo Investments Ltd. from buyout firm LeapFrog Investments in October. Kenya is one of seven focus markets in Africa for Zurich-based Swiss Re, with the others including Nigeria, Ghana, Mozambique and Angola.

While Swiss Re already reinsures companies in all of its target markets, it wants direct stakes in insurers to benefit from African growth rates that are higher than developed nations. Sub-Saharan African economies are expected to grow by an average 4.5 percent in 2015, rising to 5.1 percent next year, according to the International Monetary Fund. Nigeria’s growth rate is forecast to be 4.8 percent this year.

“The direct investments aren’t about having a footprint, it’s to benefit from the growth in primary insurance,” O’Neill said. “Africa is very attractive from a return perspective. The investments also give us a seat on the board and on-the ground experience. We want more of them in the region.”

Chairman’s Wish

The Kenyan investment was the first of its kind in Africa for Swiss Re. The company may target as many as three minority investments in Kenya and Nigeria, according to O’Neill, and it will continue to work with LeapFrog to identify any opportunities that arise when the private equity firm exits investments in Africa.

“Africa is very small in the Swiss Re context, but it punches above its weight in terms of how management see the future potential,” he said. “The chairman has told us to show our commitment to Africa.”