South African-based insurer Liberty Holdings has revealed it is in the advanced stages of acquiring a life licence in Nigeria.
Liberty announced the development as it published its financial results for 2016.
According to Reuters, Liberty Holdings will acquire a 75% stake in a Nigerian long-term for 160m rand ($12 million), as part of its strategy of expanding on the African continent.
Liberty Holdings’ group chief executive Thabo Dloti was quoted by Reuters as saying: “We see Nigeria as a market of the future. It may be having difficulties now, but everything indicates to us that in the long term, Nigeria is going to be a big contributor of growth if you are doing business in Sub-Saharan Africa."
South Africa’s life insurance segment had 73 operational insurers as of 2014, according to data from Timetric’s Insurance Intelligence Center (IIC).
In terms of market share, the life segment is consolidated, with the 10 leading insurers accounting for 82.8% of the segment’s gross written premium in the same year.
Despite the decrease in the number of participants from 76 in 2011 to 73 in 2014, the IIC notes the South African life insurance segment is overcrowded, with 58 participants holding a share of less than 1% of the market – of which six did not report any business at all in 2014.
It is therefore easy to understand the long term appeal of the Nigerian insurance market. According to Timetric’s IIC the Nigerian life insurance segment’s gross written premium increased from NGN55.7 billion (US$360.0 million) in 2011 to NGN95.1 billion (US$480.9 million) in 2015.
The IIC forecasts that the gross written premium of Nigeria’s life segment is set to rise from NGN 95.1m in 2015 to NGN 189.6 m in 2020.
The IIC says that despite having five exclusive life insurers and 10 composite insurers, the Nigerian life insurance segment is not fully reaching its potential. It still has capacity to attract business through the lines of traditional life policies, microinsurance policies, group life policies and annuity and credit life products.