South African banking group Absa sees strong potential in Mozambique’s insurance sector.
“If you look at the Mozambican market, it is still very lightly penetrated with insurance, although it has been growing in significant double-digits over the last three to five years. We think this growth is going to continue, and we want to participate in that growth,” said Willie Lategan, chief executive of Absa Financial Services.
On Monday it was reported that Absa agreed to buy Mozambican insurer Global Alliance Seguros.
Lategan told How we made it in Africa that Global Alliance mainly offers short-term insurance to commercial and corporate clients, with significant exposure to the property sector. Global Alliance has, however, launched its first life insurance product and has also started a vehicle insurance business.
Absa has an 80% stake in Barclays Bank Mozambique and plans to use its customer base and infrastructure to add value to Global Alliance’s current business. “Absa has been quite successful over a number of decades offering financial services solutions to its banking customers. We own . . . Barclays Bank Mozambique, and we see an opportunity to expand the offering to the clients in Mozambique, to a similar extent as to what we do [in South Africa],” he explained.
According to Lategan, there are no immediate plans to rebrand the business. “Global Alliance has got a strong brand in the Mozambican market. It has got very good relationships with brokers in its traditional market. So we would look at entertaining that brand for the time being.”
Although competition in Mozambique’s insurance industry is intensifying, there is still considerable room from growth. “Global Alliance is the number three player. The top four players are all significant players in the Mozambican context, and then there are a number of smaller players. Competition is heating up, but the overall insurance penetration is still less than 1% of GDP,” Lategan noted.