| Thu 9 Jun 2005, 15:07 | | Aflife plans to buy into Nigeria |
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Aflife plans to buy into Nigeria
Rob Rose
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Chief Reporter
AFRICAN Life (Aflife) is looking to buy a life assurance company in Africa’s most populous country, Nigeria, as part of its plan to become the life assurer with the widest footprint on the continent.
Already in eight African countries, Aflife revealed its Nigerian plans this week as it announced a 28% jump in profit for its financial year to March.
If this happens, it will be the first move into Nigeria by a South African life assurance company.
CEO Jeremy Rowse said Aflife had completed the desk research on Nigeria, and was now looking to identify potential acquisition targets.
“We’re serious about being a pan-African company and we believe Nigeria is an immature market. But we are taking a conservative approach,” he said.
With a population of 140-million and International Monetary Fund (IMF) forecasts of economic growth of 5,9% this year, Nigeria has been targeted by a number of South African companies wanting to expand their businesses.
Cellphone company MTN has done particularly well in Nigeria, and other South African companies including banking group Absa have also expressed interest in investing there.
But Aflife would not give any deadlines for its plan to move into Nigeria.
Rowse said his company was also investigating options in Uganda.
A report this year by credit underwriter Credit Guarantee said that Uganda was a “growing market” with an “adequate” legal and banking infrastructure.
“Uganda has a stable economic environment, typified by single-digit inflation rates, that has encouraged private investment, both foreign and local,” it said.
However, Rowse said that while Uganda was on the horizon, “Nigeria is the immediate target”.
With speculation rife that Aflife is about to be bought by a larger South African rival, such as Sanlam, its expanding African business would be a boost to any buyer.
Few South African life companies operate much beyond SA’s neighbouring countries, but Aflife has operations in Kenya, Ghana, Zambia, Namibia, Tanzania, Botswana and Lesotho.
Expansion into the rest of the continent could also be an antidote to the problem of sluggish new business volumes in SA.
Rowse said this week that Aflife had been able to grow its new recurring life business in the rest of Africa by 42% a year since 1997 — suggesting there are healthy profits to be made “up north”.
Rowse said yesterday the African expansion made sense as “we are not going to keep growing our new business in SA by 25% a year”.
Aflife’s embedded value — an estimate of the current value of the life business and one of the better indicators of a life assurer’s value — outside SA climbed 32% last year to R561m.
Aflife’s African operations also became more important to it, contributing 24% to the company’s overall embedded value compared with 21% during the previous year.
Apart from its life operations, Aflife has health businesses in Botswana, Kenya and Lesotho, and fund management operations in Zambia and Botswana.
