Old Mutual Eyes Nigeria, Kenya, Ghana Expansion with $386 Million

By Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE)-Africa’s biggest insurer, Old Mutual Plc has said it’s eyeing expansion to Africa; especially Nigeria, Kenya and Ghana, according to a Bloomberg report.

It said the insurer seeks acquisitions in Africa; especially these three (3), countries where growth rates higher than advanced countries may help boost sales after third-quarter growth declined.

“We’ve identified Nigeria, Kenya and Ghana as the key markets,” the report quoted Ingrid Johnson, chief financial officer of the company from London.

She further affirmed that there are also opportunities to look at in Mozambique after banking unit Nedbank Group Ltd acquired a stake in Banco Unico.

Johnson also disclosed that Old Mutual is looking for ways to work more closely with pan-African lender Ecobank Transnational Incorporated (ETI) where Nedbank owns 20 percent.

The report says while the insurance company which was founded in South Africa over 150 years ago moved headquarters to London in 1999, its original market remains it’s largest. Old Mutual had in March 2013, set aside 5 billion rand to expand across Africa and has since bought a stake in Faulu Kenya Ltd.

“It would be fantastic if we could find more opportunities to invest. The first prize would be to find something in those key countries. The team is looking at a lot of things,” Johnson said.

The insurer this year completed an initial public offering (IPO) for its asset management unit in New York and agreed to buy U.K.-based Quilter Cheviot Ltd. for as much as 585 million pounds ($930 million) to boost its wealth management business. It also bought Intrinsic Financial Services Ltd., a U.K. firm, gaining access to 3,000 financial advisers. Earlier in the year, Old Mutual sold what it termed non-core European units the report affirmed.

A statement from Old Mutual on Wednesday said its gross sales fell 4.6 percent in the third quarter to 6.2 billion pounds from 6.5 billion pounds a year earlier, as economic activity in South Africa slowed. The report says this was in line with the 6.21 billion-pound estimate of 11 analysts surveyed by the company. Funds under management rose 5 percent to 307.6 billion pounds.

“We reiterate our hold recommendation, but highlight the continued excellent progress the group is making at the underlying level, especially as a regards asset accumulation, and it’s positioning in the U.K.,” Bloomberg quoted Eamonn Flanagan, an analyst at Shore Capital Group Ltd. London,  in a research note.

Johnson also added that Old Mutual is looking at product innovations to increase gross sales, “The lapse rates were higher than we would have liked. You can’t always defy gravity,” she said.

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