The coronavirus pandemic has led South Africa’s largest insurer Sanlam Ltd to delay its expansion plans for Egypt and Ethiopia.
“Our focus is on the countries we are already in,” Heinie Werth, CEO of Sanlam’s Emerging Markets unit, told The Africa Report. “We don’t want to stretch too far in current circumstances. We are not in a hurry.”
Ethiopia and Egypt are still “countries of interest”, Werth added. “We would still like to go there.”
In September, Sanlam CEO Ian Kirk told Reuters announced plans to invest in Egypt in 2020, following interim results bolstered by its pan-African strategy. The company had earlier in 2019 said it wanted to take a stake in an Egyptian firm, but it had yet to find a suitable partner.
Kirk also told Reuters in September it was now looking at a number of potential companies in Egypt.
“I would say [we could invest] within the next 12 months… we’re busy on it,” Kirk said.
Sanlam, which operates in 33 countries, has been looking to diversify away from slow-growth markets in South Africa. However, coronavirus has made the strategy harder to execute in the short term.
In the face of the pandemic, Sanlam’s focus is now on client retention, and cost and claims management, Werth said.
At the end of March, the South African company said that economic growth in all its markets would be lower than anticipated, posing risks to growth in new business volumes. The battering that Africa’s economies are taking may lead to consolidation opportunities, according to Werth.
He estimates that individual life insurance sales are lower by more than 50 percent since the virus outbreak. The financial impact on Sanlam, Werth said, is to some extent compensated by lower claims on general insurance policies.
April and May will be “very difficult months” and that there could be a gradual recovery thereafter, Werth said.
