At Platform Africa, we spoke to Ilyes Hassib, CEO of SanlamAllianz Re, to understand how the largest financial non-banking institution in Africa is working to reinforce its position by entering into a joint venture with Allianz as one of the world’s leading insurers.
He goes on to explain what joining hands with Allianz means in Sanlam’s quest to balance sustainability and growth, highlighting that it is key to meet basic needs like power for an emerging continent such as Africa, while supporting a transition to more sustainable practices.
Edited excerpts from an exclusive interview:
Question: How would you describe the joint venture between Sanlam and Allianz, which received regulatory approval last year? What are the group’s ambitions?
Answer: To give a bit of a backdrop, prior to 2017/2018, Sanlam through Sanlam Emerging Markets had a large presence in East and Southern Africa. By acquiring Saham Finances, the largest Pan-African insurer outside South Africa, Sanlam expanded significantly. This acquisition led to Sanlam Emerging Markets becoming the largest African insurer outside South Africa by volume and network.
Most recently, the joint venture between Sanlam and Allianz, which received regulatory approval in September 2023, combines two major insurance players: Sanlam, the largest financial non-banking institution in Africa, and Allianz, one of the leading insurers worldwide. By joining their forces and expertise, SanlamAllianz aims to reinforce its position as a leading non-banking financial institution in Africa.
The group’s ambition is to become significant in all the 27 countries where they are present, aiming to be in the top three in the market through internal growth and possible acquisitions. The goal of Sanlam Allianz is to promote the growth of insurance, whether in life or non-life sectors.
Question: How would you explain the role of SanlamAllianz Re within the group, as a captive reinsurer serving group companies? What have been some of the highlights and challenges over the past year?
Answer: SanlamAllianz Re serves primarily as a captive reinsurer for the group, providing tailor-made solutions and acting as a risk management vehicle.
Being a captive entails providing tailor-made solutions for the group and acting as a risk management vehicle. This allows us to set a reinsurance strategy for the group that takes into account the group’s risk appetite versus the risk and reward approach. We also aim to make an underwriting profit for the group, unlike most captives which are non-profit and act primarily as risk management tools.
Over the past year, the merger presented a significant challenge, particularly close to the renewal period in September where a major highlight was the renewal of reinsurance programmes for the ex-Allianz Africa entities. This involved integrating 10 to 12 new companies into the reinsurance portfolio. We increased our own retention to manage added volatility and assured the reinsurance market that we were absorbing this internally as to preserve our risk profile. Despite some market challenges in 2023 due to the hardening of the reinsurance market, the renewal went smoothly, with a positive reception from the market.
Post-merger, we are also looking at optimising our operations on the ground. In some territories, we have an overlap with the Allianz and Sanlam brands. For example, in Côte d’Ivoire, the merger has given rise to Sanlam Allianz, leading the market. We are working on other mergers, such as in Senegal, which has just been finalised, and other territories where the merger between the two brands will occur.
Question: Beyond its role as a captive reinsurer, SanlamAllianz Re is also providing third-party insurance on the African continent. How do you see the evolution of the reinsurance market in Africa? Are there enough players on the African market to cover the risks?
Answer: The reinsurance market in Africa is evolving, but there is still a need for additional capacity to address the dynamic and growing needs, especially in infrastructure and personal lines.
While capacity remains an issue, the risk appetite of the international market for Africa is also a concern. The market has seen some retrenchment during COVID-19, but is now cautiously returning. However, exclusions such as those for communicable diseases have become common. For example, South Africa saw significant insurance and reinsurance payouts due to non-damage provisions in business interruption policies during COVID-19. Reinsurers now exclude financial losses unless there’s property damage.
In terms of geography, European reinsurers are predominant, but have reduced exposure to certain industries such as coal due to ESG considerations. While American and Asian reinsurers are taking a different approach, Europe’s presence in Africa remains significant. For our part, we believe it is key to meet basic needs like power while supporting a transition to more sustainable practices.
Question: How do you perceive the position of Mauritius in the reinsurance market? Do you believe it is a hub for Africa, or can it aspire to become one? Why has SanlamAllianz Re chosen to continue the operations of its predecessor company in Mauritius?
Answer: Mauritius is a growing financial hub, especially for captives, benefiting from a robust regulatory framework and a well-developed education system. It is seen as the primary location for captives in Africa, with South Africa being the only other notable player. Mauritius offers a friendly regulatory environment and cost-effective solutions, making it an attractive hub. SanlamAllianz Re continues operations in Mauritius due to its strategic benefits, including proximity to South Africa and a favourable business environment supported by a strong governance framework.
Compared to one of the leading financial hubs in Africa, the Casablanca Finance City in Morocco, Mauritius made it possible for captives to underwrite third-party business, promoting financial inclusivity and engineering for reinsurance. The education system in Mauritius also provides a talented workforce. Nonetheless, we have over 12 nationalities within Sanlam Allianz Re, making us the most diverse company within the group. We aim to grow our talent in Mauritius and give back to the community.
Question: From a third-party insurance perspective, what kind of reinsurance products or solutions are most in demand currently? Do you consider that any new lines of business are needed?
Answer: Currently, there is a significant demand for political violence and political risk insurance, especially in election years. We aim to offer sustainable solutions, embedding political violence cover in motor insurance policies, for example, to provide continuous coverage. Political risk insurance, including coverage for misappropriation and nationalisation, is more complex and often requested by international investors. We are seeing more demand for these products, but they come with reputational risks.
Credit insurance is also in demand, though the legal framework in many African countries is still developing.
SanlamAllianz Re is also seeing growing demand for climate-related parametric insurance solutions, especially for agriculture, where there are several government and World Bank-sponsored projects that we are keen to support.
Construction, property, energy, and mining insurance are also in high demand due to ongoing infrastructure projects across Africa. While we are cautious about certain sectors from an ESG perspective, we recognise the importance of these industries for Africa’s development.
Question: To what extent is sustainability playing a role in the development of reinsurance products for Africa?
Answer: Sustainability is a core value for SanlamAllianz Re, aligned with the group’s ESG policies. We have an ESG committee that reviews all potential exposures, ensuring they align with our core values. The company balances servicing basic needs, such as power infrastructure, while promoting transition towards sustainable practices. This pragmatic approach ensures that while immediate needs are met, there is a clear direction towards long-term sustainability.
Question: How would you describe your overarching ambitions in Africa?
Answer: SanlamAllianz Re is committed to growing its talent pool and fostering a diverse culture within the company. The company is focused on supporting Africa’s growth and providing innovative insurance solutions that cater to the continent’s unique needs, ensuring both risk management and profitability for the group.
