|Title:||Africa insurance/reinsurance premium income by geographic region in dollars and including percentage ceded for 2010|
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Insurance/Reinsurance Premium Income by Region
Insurance Reinsurance Region Premium (US$) Premium
Anglophone West Africa X,XXX,XXX,XXX XXX,XXX,XXX Francophone West & Central Africa X,XXX,XXX,XXX XXX,XXX,XXX North East X,XXX,XXX,XXX XXX,XXX,XXX Maghreb X,XXX,XXX,XXX XXX,XXX,XXX African Indian Ocean Islands XXX,XXX,XXX XX,XXX,XXX Southern Africa (less S.A.) X,XXX,XXX,XXX XXX,XXX,XXX East Africa X,XXX,XXX,XXX XXX,XXX,XXX South Africa Non-Life Reinsurance X,XXX,XXX,XXX X,XXX,XXX,XXX South Africa Life Reinsurance XX,XXX,XXX,XXX XXX,XXX,XXX Total XX,XXX,XXX,XXX X,XXX,XXX,XXX
Region % Ins. Ceded
Anglophone West Africa XX.X Francophone West & Central Africa XX.X North East -XXX.X Maghreb XX.X African Indian Ocean Islands XX.X Southern Africa (less S.A.) XX.X East Africa XX.X South Africa Non-Life Reinsurance XX.X South Africa Life Reinsurance X.X Total XX.X
Source: African Reinsurance Corp.
Sub-Saharan Africa has breakout potential as a developing insurance market, but for growth to accelerate, market observers say the region's many and diverse countries need further consolidation of fragmented primary insurance markets and greater competition among reinsurers.
There are significant opportunities both for direct insurers and reinsurers in fast-developing markets such as Kenya, Nigeria and Ghana, said Carlos Wong, senior director with A.M. Best Europe-Rating Services Ltd.
Udai Patel, managing director with London-based Afro-Asian Insurance Services, an insurance and reinsurance broker, said strong economic growth, particularly in East Africa, will fuel insurance market growth across the region.
"There is an increasing interest among foreign companies in Africa," he said. "The major international brokers have a presence in the region. Munich Re has been there a long time, with a head office in Mauritius. Lloyd's is showing an increased interest."
Two conferences held this autumn highlighted growing interest in the region's insurance markets--the XXnd FAIR Conference in Cairo, Egypt, hosted by the Federation of Afro-Asian Insurers & Reinsurers, and the XXth African Reinsurance Forum hosted by the Africa Insurance Organization in Dakar, Senegal.
Elizabeth Amadiume, director of special operations and special risks for African Reinsurance Corp., said in a presentation at Dakar that there has been an "upturn" in African insurance market activity over the past decade. "These activities include a move toward risk-based supervisory regimes, deregulation, consolidation, liquidations and mergers and acquisitions," she said in her presentation.
Junior John Ngulube, chief executive of Munich Reinsurance Company of Africa Ltd., said sub-Saharan Africa has weathered the global economic slump well, and with a X.X% gross domestic product growth rate in 2008 and 2009, the region offers reinsurers an expansion alternative.
But foreign reinsurers will still have "great difficulty" establishing a presence in Africa, due to its sheer size and differences among subregions, he said. With XX countries spanning a very large geographic spread, sub-Saharan Africa poses a formidable challenge for reinsurers seeking to set up a profitable infrastructure. Ngulube added that regulatory structures vary widely among subregions in Africa.
"The English-speaking world, because of a shared history, tends to have very similar regulatory frameworks," he said. "In French-speaking West Africa they tend to have a single regulatory framework which applies in all XX countries."
Countries with a Portuguese legacy have different regulatory frameworks as well, he said.
Ngulube estimates that Africa's reinsurance market is worth about US$X billion, with South Africa representing $X.X billion of that. South Africa's nonlife insurance total is about $XX.X billion, with the entire continent registering $XX.X billion in premiums.
Foreign players are more likely to break into sub-Saharan markets than primary insurers, given a fragmented domestic primary market in most countries, with few domestic reinsurers.
Yassir Al Baharna, chief executive of Bahrain-based Arab Insurance Group, said Africa's insurance markets have only a small number of reinsurers, making reinsurance an attractive play for outside companies. Arig itself has had a lengthy presence in sub-Saharan markets as well as in North Africa, and is confident of its growth prospects in both regions.
Some of the obstacles to achieving critical mass in sub-Saharan markets include relatively small premium amounts and difficulties in remitting income from some African countries to a reinsurer's home country, Baharna said.
Wole Oshin, managing director and CEO of property/casualty insurer Custodian & Allied Insurance plc, based in Lagos, Nigeria, said there are XX primary insurers in Nigeria. Seven are life insurers and the rest are either composite or nonlife. Oshin believes a more
efficient market would be comprised of about XX insurers.
Eyes on Nigeria
Foreign insurers--mainly those based in South Africa--are showing an interest in Nigeria, he added.
In her conference presentation, Amadiume noted that Nigeria has already seen significant consolidation.
"In Nigeria, there were a number of mergers and acquisitions when its regulator decided to shore up the capital base of life, nonlife and reinsurance companies to US$X billion, US$X billion and US$X billion respectively," she said. "This reduced the number of insurers from XXX to XX."
Amadiume added that "further consultations are taking place among insurers to further reduce the number of operators in the market."
In West Africa, Nigeria stands out for insurance market potential as the region's most populous country with XXX.X million people, given its huge energy industry and consumer possibilities.
"The insurance industry is still in its infancy and hasn't reached its potential at all," said Oshin.
Oshin is optimistic that the country's insurance market will have the openings needed for growth, mainly through consumer advances and the energy industry.
He pointed out that Nigeria has one of the lowest insurance penetration rates in Africa, at X.X (life and nonlife combined), according to Swiss Re's SIGMA report on the 2009 global market.
By comparison, the penetration rate for Kenya, East Africa's most promising market, is X.X.
South Africa leads the sub-Saharan region with a penetration rate of XX.X, the same as the United Kingdom. Second and third in the region are Namibia at X.X and Mauritius at X.X.
A former chairman of the Nigeria Insurance Association, Oshin said recent regulatory changes, including compulsory life insurance and pension coverage for workers, will boost insurance business.
Kenya is a model of the struggle to achieve profitable growth in an economy with much potential but considerable inefficiencies, said Stephen Wandera, chief executive of British-American Insurance Co. of Kenya Ltd.
Since 2005, insurance premiums in Kenya had seen an average of XX.X% compound annual growth rate, even as growth of the gross domestic product has been between X.X% and X.X%, said Wandera, who is also chairman of the Kenya Insurers Association.
Property/casualty insurance has grown by XX.X% at CAGR. Pension growth has been XX% in the same six-year period. Individual life growth has averaged XX.X%, and group life averaged XX% growth.