Bancassurance in Sub-Saharan Africa: Current State and Future Perspectives

Bancassurance in Sub-Saharan Africa: Current State and Future Perspectives
Bancassurance Models
Bancassurance in Sub-Saharan Africa:
Current State and Future Perspectives
Around the World
9th Annual Bancassurance Conference
Vienna, October 02nd – 03rd 2014
© Finaccord Ltd., 2014 Web: www.finaccord.com. E-mail: info@finaccord.com 1

Agenda
 The African opportunity
Macro-economic development in sub-Saharan Africa
 Development of the banking and insurance sector in sub-
Saharan Africa
 Bancassurance in sub-Saharan Africa: regulatory
environment, product range, and operating models
 Future outlook

The African opportunity

 Africa is forecasted to be home of 11 of the 20 fastest growing
economies by 2017
 Africa possesses 30% of the world's total resources
 Africa has the fastest-growing working age population in the
world
 Africa has the fastest-growing middle class in the world
(standing at 313 million in 2013)
 Africa's consumer spending is forecasted to reach USD 1.4
trillion in 2020
Source: African Development Bank, McKinsey, Standard Bank, World Bank

GDP based on purchasing power parity (PPP), yearly growth, 2006 to 2020 (forecast)
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
Source: IMF
European Union Sub-Saharan Africa
2006 2008 2010 2012 2014 2016 2018 2020

Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
Tanzania
Uganda
Zambia
South Africa

Macro-economic development
GDP in current prices in sub-Saharan Africa, segmented by country, 2008, 2014, and 2020 (forecast)
Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia
As of 2008 As of 2014 2020 (forecast) Series4
Source: IMF 0 100 200 300 400 500 600 USD billion

PPP per capita in sub-Saharan Africa, segmented by country, 2008, 2014, and 2020 (forecast)
As of 2008 As of 2014 2020 (forecast) Series4
0 4,000 8,000 12,000 16,000 Int. dollars
Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia
Source: IMF

Total population in sub-Saharan Africa, segmented by country, 2008, 2014, and 2020 (forecast)
As of 2008 As of 2014 2020 (forecast) a
Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia
Source: IMF 0 50 100 150 200 250 million

Residential mortgage / non-mortgage consumer lending balances in sub-Saharan Africa, 2009 to 2013
USD billion
200
150
100
50
0
Residential mortgage balances outstanding
Consumer non-mortgage balances outstanding
2009 2010 2011 2012 2013
Source: Finaccord research
France in 2013:
USD 1.21 trillion
(mortgage
lending)
USD 331.7 billion
(consumer
lending)

Residential mortgage / non-mortgage consumer lending balances in sub-Saharan Africa, 2013
100%
80%
60%
40%
20%
0%
South Africa Nine other countries in sub-Saharan Africa
Mortgage balances Consumer lending balances

Development of the banking sector
Number of branches in sub-Saharan Africa, segmented by country, 2005 and 2013
As of 2005 As of 2013 Series3
0 1,000 2,000 3,000 4,000 5,000 6,000
Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia
Source: IMF

Number of branches per 100,000 adults in sub-Saharan Africa, segmented by country, 2013
12.7
5.0
6.1
6.0
4.0
5.5
Brazil: 46
Morocco: 22
Tunisia: 17
10.3
2.6
3.0
4.7
0 5 10 15
Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia
Source: IMF

Number of deposit accounts in sub-Saharan Africa, segmented by country, 2005 to 2013
As of 2005 As of 2013 Series3
0 10 20 30 40 50 60 million
Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia
Source: IMF

Development of the insurance sector
GWP for life and non-life insurance in sub-Saharan Africa, 2009 to 2013
USD billion
70
60
50
40
30
20
10
0
Life insurance Non-life insurance t
2009 2010 2011 2012 2013
Source: Finaccord research, national sources

Nominal and real CAGRs for life and non-life insurance, segmented by country, 2009 to 2013
Angola
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia
Nominal Real tricker
-5% 0% 5% 10% 15% 20% 25% 30% 35%
Côte d'Ivoire
Total

Life and non-life insurance GWP per capita in sub-Saharan Africa, segmented by country, USD, 2013
44
20
20
35
8
11
6
4
23
European average in
2012: USD 1,724
1,028
1,060
0 20 40 60
Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia

Life and non-life insurance GWP as percentage of GDP in sub-Saharan Africa, segmented by country, 2013
0.8%
1.7%
1.1%
3.4%
1.3%
0.6%
European average in
2012: 6.7%
In line with Eastern
European countries
15.5%
0.9%
0.7%
1.5%
0% 5% 10% 15% 20%
Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia

Life insurance Non-life insurance
0% 20% 40% 60% 80% 100%
Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia
Average
© Finaccord Ltd., 2014 Web: www.finaccord.com. E-mail: info@finaccord.com
19
The relative importance of life and non-life insurance in sub-Saharan Africa, segmented by county, 2013

Development of the bancassurance market
Regulatory environment for bancassurance in sub-Saharan Africa, overview of current status
Country Assessment Comment
Angola No specific restrictions
Côte d'Ivoire No specific restrictions
Ghana No specific restrictions
Kenya No specific restrictions
Mozambique No specific restrictions
Nigeria Banks not allowed to own an insurer directly
South Africa No specific restrictions
Tanzania Currently no clear regulatory framework
Uganda Banks not permitted to sell stand-alone insurance
Zambia Currently no clear regulatory framework
Source: Finaccord research, national regulators

Involvement in bancassurance of the ten largest retail banks in each country, 2014
Bundled products offered Stand-alone products offered
Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia
Average
Source: Finaccord research 0% 20% 40% 60% 80% 100%

Average number of insurance types offered by the ten largest retail banks in each country, 2014
Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia
Average
2.3
5.5
3.2
6.1
4.9
4.2
6.1
3.4
2.3
3.2
4.1
0 2 4 6 8

Overall provision rates for insurance types offered by the ten largest retail banks in each country, 2014
Creditor insurance - consumer loans
Creditor insurance - credit cards
Creditor insurance -mortgages
Funeral expenses insurance
Health / hospital cash plans
Investment-related life insurance
Medical expenses insurance
Personal motor insurance
19.0%
85.6%
13.8%
89.5%
22.0%
4.0%
64.0%
17.0%
5.0%
53.0%
10.0%
20.0%
15.0%
5.0%
19.0%
0% 20% 40% 60% 80% 100%
Accident insurance
Household insurance
Retirement savings
Risk life insurance
Travel insurance
Agricultural insurance
Commercial insurance

Weighted operating models for insurance offered by the ten largest retail banks in each country, 2014
External underwriter Captive underwriter
JV underwriter Multiple external underwriters
Other Series6
0% 20% 40% 60% 80% 100%
Angola
Côte d'Ivoire
Ghana
Kenya
Mozambique
Nigeria
South Africa
Tanzania
Uganda
Zambia

Key banking and insurance players in sub-Saharan Africa
 Banks
 International groups: Barclays (Absa), Standard Chartered
 Pan-African groups: Ecobank, Equity Bank, FBN Bank, First
Rand Group, Standard Bank, Zenith Bank
 Insurers:
Many Kenyan, Nigerian, and South African banks
aspire to have a pan-African presence considering
bancassurance as an integral part of their strategy
 Barclays (Absa), Hollard, Sanlam, Standard Bank
Only a minority of insurance companies currently have
a pan-African bancassurance approach

Future outlook
Forecast for gross written premiums for life and non-life insurance in sub-Saharan Africa to 2020
USD billion
120
100
80
60
40
20
0
Life insurance Non-life insurance t
2013 2020

Any questions?
Related Finaccord publication:
Bancassurance in sub-Saharan Africa:
Current Status and Future Outlook to 2020 (published September 2014)

Bancassurance in Sub-Saharan Africa: Current State and Future Perspectives

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