Justin Brown
MMI Holdings was looking to grow its contribution to its earnings from the rest of Africa to between 10 percent and 15 percent over the next few years from 5 percent at present, chief executive Nicolaas Kruger said.
The insurance and financial services group, formed out of the merger of Metropolitan and Momentum in 2010, has a presence in 12 African countries including Nigeria, Kenya and Ghana.
MMI was looking to grow its general insurance and short-term insurance lines in the rest of Africa as only two of the 12 countries in the region sold these products, Kruger said during an interview at the World Economic Forum on Africa.
A key thing that MMI would like to do was to customise its products for local conditions, Kruger said.
For instance, in Nigeria funeral products did not sell that well as there was an aversion to speaking about death, he added.
Expanding into Africa was attractive as the net profit margin on premiums was 3 percent plus compared with 2 percent in South Africa.
With a net profit margin on premiums that was 50 percent higher and faster growth, the rest of Africa was quite attractive, Kruger said.
Insurance penetration in Africa was 1 percent to 2 percent of gross domestic product (GDP) compared with 10 percent to 12 percent in developed markets.
In the southern African region, where MMI has a presence in Lesotho, Botswana and Namibia, the group’s interests in these regions was quite mature as the group had been there a long time, Kruger said.
“Metropolitan entered Lesotho 20 years ago,” Kruger added.
To date MMI has avoided Zimbabwe.
“We have looked at Zimbabwe but we have not entered there yet,” Kruger said.
In all African countries where MMI has a presence, MMI has at least a controlling stake in its African units and usually a local partner with an interest in the business.
MMI has typically established a presence in African countries where English is the language of business. Out of 12 African countries, Mozambique, where Portuguese is the major language, is the only non-English speaking country where MMI is present.
One African country MMI is eyeing is Angola. “Angola has a sizeable economy,” Kruger said.
Away from Africa, MMI has also entered India with a joint venture with conglomerate Aditya Birla. MMI was looking at offering a health and wellness product in the country, Kruger said.
A licence was being applied for in India and MMI was hoping to start operations there by the middle of next year.
“We are busy with business plans but it is too early to make the numbers public. The size of the Indian market means it has huge potential ,” Kruger said.
MMI has no stated target related to its plans in India but the move into the country had a lot of strategic importance for the group, he added.
“India has 1.2 billion to 1.3 billion people, an economy that is growing fast and a growing middle class,” Kruger said.