Like many sectors in Africa, insurance has also been hit by the Covid-19 health crisis. This naturally impacted its players, but also the thinking and the way of managing, on the continent, the risk related to people, things, goods, responsibility and debts. What about, for example, the African leader in insurance, Sanlam? How did he choose to respond in such a context? How does he understand the new environment in his various professions? So many questions about this South African company, which, two years ago, acquired Saham Finances, champion of non-life insurance on the continent. While Sanlam was on the way to quietly establish its supremacy in Africa, combining its leadership in life and non-life insurance, the Covid-19 health crisis disrupted its agenda. On his reaction, his realities and all the adjustments induced by the new situation, Paul Hanratty, its CEO, spoke to Point Afrique.
Le Point Afrique: Where is Sanlam today, two years after the takeover of Saham Finances?
Paul Hanratty: The Sanlam Group is very satisfied with this acquisition, as our strategic desire was to acquire complementary activities which position Sanlam as a resolutely Pan-African financial services group. It was also a question of consolidating our vision in order to establish Sanlam as the most popular financial services player on the continent.
The additional geographical footprint as well as the service offerings now allow the group to offer a full range of solutions, both to individuals and businesses, in the fields of life and non-life insurance (including specialized insurance: agricultural, maritime, etc.) as well as health, assistance, credit to individuals and asset management.
The integration of the Saham Assurances entities continues today, having started as of the acquisition. To this end, we have worked to develop synergies in order to deploy life activities in markets where Saham Assurance has historically had a very strong positioning as a non-life insurance company. We have also made good progress in other areas, such as the growth of specialized insurance activities and the optimization of reinsurance across all of our territories.
On another note, we have only made very few organizational changes, in order to capitalize on the strengths and assets of the teams in place and minimize disruption to operations. This is how the management of the former Saham Finances, now called Sanlam Pan Africa Maroc, and the management teams of our various subsidiaries have remained virtually unchanged. However, we have adopted a business approach (life and non-life insurance) with central teams based in Casablanca and Cape Town. These teams respectively oversee the management of all of our non-life and life businesses across the continent.
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While the site of the merger between the life activities of one and the non-life of the other was underway, the Covid-19 has come to complicate your ecosystem. What are the repercussions that this new situation has had on your roadmap?
The various containment measures imposed by countries, following the Covid-19 pandemic, have had an impact on our ability to manage our activities in most markets. Starting with the marketing operations in areas dedicated to individual customers, where direct contact was no longer possible. That said, all of our companies were able to work remotely, continue their activities and, above all, ensure the continuity of customer service in terms of processing and settling claims. Some lines of business, such as non-life insurance, have seen only marginal declines in new business, which depends very little on direct sales. In addition, investment returns were impacted, as expected, by the decline in stock market performance in various markets.
As explained during the presentation of Sanlam’s half-year results, on September 10, 2020, the group adopted a cautious approach to the valuation of its activities, given the uncertainty that hangs over the outcome of Covid-19, combined with the impact of the fall in oil prices on the economic recovery of the markets. Economic assumptions have thus been revised downwards, both in terms of economic growth forecasts and future returns on investments.
Consequently, the group proceeded to write down the book value of a number of assets in Africa, Lebanon and India. These include, among others, part of the assets relating to the former Saham Finances, due to the expected slowdown in economic growth in all of our countries of presence and the deterioration of the political and economic environment. in Liban.
Today, we remain deeply convinced that the synergies resulting from the acquisition of ex-Saham Finances can be achieved, but within longer timeframes than those initially planned. We are also confident that our business is well positioned to benefit from the economic recovery going forward.
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What is your strike force today compared to the competition?
Sanlam has a unique continental network of non-bank financial services, with a presence in 33 countries and a workforce of nearly 33,000 colleagues in Africa. In addition to developing and serving our personal and corporate portfolio through our direct sales channels and agents at local, regional and international levels, we also work in partnership with banks, aggregators, telecommunications operators and groups. industrialists to address new customer segments using a differentiated approach. Our business expertise, coupled with in-depth knowledge of our local markets, allows us to deploy a true “One Stop Shop” approach for the benefit of our business customers as well as our privileged partners and distributors.
Today, the insurance sector is certainly marked by increased competition. But we are deeply convinced that she will benefit in fine to customers, by guaranteeing them access to solutions adapted to their needs. In addition, since insurance penetration in most countries of the continent is very low, the game of competition will hopefully promote a “democratization” of insurance to lead to a more inclusive offer in Africa.
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While we expected a massacre due to Covid-19, Africa has shown itself to be more resilient than one might expect. What lessons do you draw from this in the very risk assessment for Africans?
It is true that governments have responded differently to the crisis. But it is clear that most countries have reacted both with speed and caution, by enacting the necessary measures to contain the spread of the virus and minimize its impact on the health of populations. The progression of the pandemic has thus been contained within reasonable proportions, as demonstrated by WHO statistics, which testify to the discipline and resilience of Africa and its populations.
The Covid-19 crisis has exposed the dual reality of the economic systems within which Africans and their businesses operate. What reforms would you consider important to implement locally and at the continental level to breathe new life into your business?
The Covid-19 has undeniably impacted the global economy and therefore we have seen a contraction in all markets. Therefore, no African country is immune to the devastating impact of the pandemic on economic growth. Individuals and companies quickly adapted to containment measures and adopted a new way of working and living. Today, while opinions differ as to how long it will take for economies to recover, we must work to contribute to and benefit from the coming recovery when the time is right.
As I explained before, investment markets have been affected and disrupted by the fall in oil prices. Countries then had no choice but to turn to domestic markets to stimulate their respective economies. I believe this has been the perfect opportunity for African countries to finally begin to explore and develop regional and intra-African trade, in order to reduce their dependence on their historical trading partners. .
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When leaving your original space (southern Africa), you were confronted with new cultures, realities, practices and regulations, but also with very different economic environments. How did you or do you plan to reconcile all the challenges to be taken up by spreading in your structures the philosophy and the approach which made your success so far?
You cannot be a resolutely Pan-African company without knowing how to appreciate and integrate the diversity of the continent! While Sanlam established its roots in Southern Africa over 100 years ago, the group’s expansion across the rest of the continent is guided by a business philosophy based on partnering with local shareholders. Sanlam’s added value is therefore to bring its know-how and technical expertise to local governance bodies and management, which are thus equipped with the necessary means to manage activities in their respective countries.
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What place for insurance as conceived by Sanlam in an Africa that wants to change its approach and development model by integrating more and more local values into its products and services?
The only path to responsible development of the insurance penetration rate in our markets is through the adoption of a “client-centric” approach for all of our activities. Thus, instead of deploying a “standardized” approach, it is more for us to become aware of and respect cultural diversity as well as the specificities of the markets in which we operate.