By entering into a $100 million strategic partnership with Jubilee Holdings, the German insurance giant is clearly exposing its strategy: priority is now given to the east of the continent.

It is a particularly thin insurance heavyweight that is back on an acquisition campaign in Africa. After having sold in March 2019 its shares in its subsidiaries in Benin, Mali, Togo and Burkina Faso to senegalese Sunu, then merged its activities in December of the same year with Sunu Centrafrique Assurances, Allianz pulls out the cheque book.

The German insurer has just entered into a strategic partnership with Jubilee Holdings Limited – the largest insurance group in East Africa, founded by the Aga Khan network – which targets the five African countries where Jubilee Insurance currently operates. The agreement covers Jubilee's non-life business in Kenya, Tanzania and Uganda, and the short-term insurance segment in Burundi and Mauritius, whose control will be transferred to Allianz for 10.8 billion Kenyan shillings ($100 million).

Jubilee Insurance will retain its life and pension businesses, as well as its medical insurance business in Kenya, Uganda and Tanzania. The transaction is expected to be completed in the first quarter of 2021, following the approval of the regulatory authorities of the countries concerned.

In the Cima zone, a regulation that does not pass

An anchorage in the East, therefore, for the one that competes for market share with another global giant, the French Axa, positioned in North Africa and West Africa (with subsidiaries in Morocco, Algeria, Egypt, Senegal, in Côte d'Ivoire, Nigeria, Cameroon and Gabon). This choice can be explained all the more since the regulatory framework is no longer favourable to it in the West of the continent.

This framework makes it difficult to maintain profitability levels in line with our expectations.

"This transaction is in line with the group's strategy because it achieves certain objectives of return on equity and profitability. In recent years, Allianz has continued to record satisfactory profitability throughout the Cima (Inter-African Conference of Insurance Markets) area, including the divested entities. However, the new Cima regulations impose a minimum share capital of 5 billion CFA francs by mid-2021," Nandini Wilcke, Regional Director of Mergers, Acquisitions and Transformation at Allianz Africa, told Jeune Afrique.

"Given the size of these markets, Allianz's projections suggest that the increase in regulatory capital would make it difficult to maintain profitability levels in line with the group's expectations."

Cameroon and Côte d'Ivoire, always a priority

Decided in 2016, the reform of the capital regulations of insurers in the Cima zone has increased the level of share capital of companies in the zone from 1 billion to 3 billion CFA francs (within three years), then to 5 billion in 2021.

We injected capital where it was needed

A reform supposed to strengthen the sector and allow the emergence of stronger players, able to make the investments in products, technical innovations and distribution channels deemed necessary for the growth of the sector. However, the cost of this reform has raised many concerns among local actors. Context of Covid-19 pandemic obliges, it also questions the giants of the sector.

However, Allianz assures him, he has continued his investments in the Cima markets where he currently holds strong positions, notably in Côte d'Ivoire, Senegal and Cameroon. "We have injected capital where it was necessary to meet the new regulatory requirements, and we continue to develop our distribution networks to offer the best of Allianz solutions to our customers," says Nandini Wilcke.

The group is now established in twelve countries of the continent

The German group, which posted a global turnover of 142 billion euros in 2019, including 663 million euros for the African continent, thus completes the refocusing of its activities towards the most efficient markets. And he now hopes to reach a leading position also in the East of the continent.

In the meantime, with its foray into four new countries (Allianz Partners is already established in Mauritius), the group led by Olivier Bäte since 2015 has an imprint in twelve countries on the continent. Nine, under its Allianz Africa branch.