UK’s insurance and protection major, Prudential has acquired a stake in Zenith Life to make way for Zenith-Prudential Life Insurance, the new name of the company.
Matt Lilley, chief executive of Prudential Africa who confirmed the development in an official statement said:
“Prudential’s purpose is to take the worry out of life’s big financial concerns, helping our customers face the future with confidence. Today’s announcement is an important milestone for Prudential and our growing portfolio of high-quality life insurance businesses in Africa. We are excited by the opportunity of partnering with Zenith Bank, one of the largest and most dynamic banks in Africa, and working with our new colleagues to build Zenith-Prudential into a leader in Nigeria’s growing life insurance industry.”
Speaking for Zenith Life, Jim Ovia, Founder of Zenith Bank and Zenith Life, said: “This landmark transaction is set to redefine the life insurance industry in Nigeria. Given the combination of Zenith Life’s local presence with one of the world’s oldest and most successful life insurers, we expect Zenith-Prudential Life to act as a significant catalyst within the sector. We anticipate creating thousands of employment opportunities in Nigeria by embarking on this transformational deal.”
While Peter Amangbo, Group Managing Director/CEO of Zenith Bank, said: “Zenith Bank has always sought to partner with best-in-class global players. By developing a bancassurance offering in conjunction with Zenith-Prudential Life, we will be positioned to offer our clients a greater bouquet of products, enhancing our ability to meet their financial needs.”
Neither Prudential nor Zenith Life disclosed what was paid for the acquisition. Zenith Bank is expected to disclose it in its third quarter result should in case the deal was seal before finalisation of financials for the second quarter o fthe year.
The acquisition is expected to bring about a more bullish stance from Zenith-Prudential Life is apparently a small player in Nigeria’s USD1 billion insurance, the company’s gross premium income is about NGN3.3 billion in 2016, that is approximately USD10.82 million using real time exchange rate.
However, Prudential said the acquisition and bancassurance partnerships will see Prudential enter the market in Nigeria. With Zenith Bank’s 350 branches and over 1.6 million customers, the UK insurance major is looking at leveraging the scale to push further into Africa’s largest economy.
Prudential is very much active in Ghana, Kenya, Uganda and Zambia, to enter Nigeria via Zenith Life is a strategic bearing in mind that insurance penetration in Nigeria is below 1% compared to South Africa where all insurance companies get about USD50 billion premium per annum.
This deal is not the first in the last three years. In 2014, AXA, the world’s third-largest insurance provider acquired 77% stake in Mansard, a subsidiary of Guaranty Trust Bank. Last year, Swiss Re was also reported to have bought 25% stake in Leadway Assurance PLC.
Confirming the Swiss Re deal, Leadway’s Managing Director Mr Oye Hassan-Odukale said “Swiss Re was selected as an investor because of the existing and well-established relationship between the two organisations. This comes in addition to Swiss Re’s long-standing commitment to the insurance sector which combines financial strength, risk transfer expertise and its direct investments.”
He added that “The investment allows Swiss Re to deploy capital in-line with its strategy of accessing new risk pools in emerging markets and to support insurance development across the globe. The investment comes after the exit of the International Finance Corporation (IFC), a member of the World Bank, which was the second largest shareholder of Leadway Assurance.
“The relationship between Swiss Re and Leadway started nearly 40 years ago when the then domestic insurer was in the process of ramping up its direct and personal line insurance operations into commercial and industrial line insurance operations to compete in a market which was dominated by much older foreign linked insurers.’’ he said.
Earlier this year, Discovery of South Africa announced that it has acquired a stake in a Nigerian insurance company.