In September last year, Sanlam and Allianz, two of Africa’s largest insurance companies, obtained regulatory approval to merge the two businesses. This allowed them to form one large entity that will serve 27 markets across the continent.

In Rwanda, Sanlam has rebranded to SanlamAllianz.

The New Times’ Business Editor Julius Bizimungu spoke exclusively to Robert Dommisse, the Group CEO of SanlamAllianz Life Insurance for what this means to the markets where the two companies operate.

The interview has been edited for clarity and brevity.

Below are excerpts:

You are forming this big entity with operations across Africa. Take us through how this process is going.

We closed the deal last year in September, meaning that we got all regulatory approvals to do the first part of the deal. So, the first part of the deal was that Allianz and Sanlam put all of its businesses on the continent into one holding company.

Across the continent, we have a number of markets where we have two insurance companies; two life insurance companies, and two general insurance companies. There's 18 such companies, which we are busy merging in places like Nigeria and Ghana. So, that's a further regulatory approval process that we are currently going through where we have to get again approval from the regulators to merge those businesses.

Once that's finished, everything is in place. Overall, Sanlam now has a 60 per cent shareholding in this joint venture and Allianz owns as a 40 per cent stake.

In Rwanda, Allianz did not have a business. What we are doing is basically rebranding.

ALSO READ: Sanlam, Allianz merge to create pan-African insurance giant

What could this joint venture mean for you in markets where Allianz didn't have operations like Rwanda?

It is really around tapping into those skill sets where Allianz has very deep skill sets on the on the general insurance side. On the life insurance side, Allianz was not very big on the continent, except for Egypt where they have a very big life insurance business. It is for us now to learn from that business to understand what Allianz brought to that business.

We're also establishing direct connections with Munich, where Allianz is headquartered, to gain a better understanding of their life insurance business. Their global life insurance operations are significantly larger than Sanlam's.

Although they're not very well known generally on the continent, they are one of the biggest insurance companies in the world. And our rationale is that if we cannot learn something from them then really, it's upon us.

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What kind of efficiency gains could this bring to the markets where you operate?

Let’s look at it from life and general insurance segments. With life insurance, we have good systems at this stage in Rwanda. We have migrated over the last 2-3 years onto brand new systems.

What we hopefully can get from Allianz is on the innovation side because they spend a lot of money on innovation, which we just don't have that kind of money. I think that's what we can get on the life side.

On the general insurance side, we get rating benefits. For example, we have a reinsurance company based in Mauritius that a few weeks ago rebranded. They can now get a credit rating based on the Allianz balance sheet, which is a massive benefit. Nowhere on the continent can we get that kind of rating. That's a huge benefit in terms of creating capacity for reinsurance.

You have heard that the recent renovation of the Amahoro Stadium was insured by Sanlam. That’s another benefit you get on the general insurance side, which is this bigger capacity to cover bigger risks.

It's also the technical expertise on the underwriting that you gain [on new areas such as the environmental, social, and governance (ESG) projects]. Allianz is massive in the ESG world, so this is good for us.

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Allianz is also heavily invested in asset management. Does that mean that you could start offering asset management services in markets like Rwanda?

We [Sanlam] currently have asset management businesses in different markets including in East African countries such as Kenya, Uganda, and Tanzania where we recently opened one.

Logically, the next market should be Rwanda to look at asset management, but that we don't have to have Allianz.

But there's a lot of work that they do with governments in terms of treasury management, and those kinds of solutions, which we've never had access to because we just don't have the scale and the expertise.

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How are these asset management businesses currently performing?

They are all profitable, but they are a relatively small contribution to the overall profit. The most important aspect of an asset management business is that they also manage the assets of the life insurance business and the general insurance business.

For me, that's the most important thing that they get very good investment returns so that we can offer our policyholders on the life side very good investment returns.

There’s still a big market for life insurance. How do you scale?

You are right, the insurance penetration is less than 2 per cent [for a market like Rwanda]. If you had asked me two years ago, I would have told you that microinsurance is the way out.

We’ve tried that. We were in a joint venture with MTN, we are doing work with Safaricom [with Mpesa], and other telcos across the continent. We’ve not found that silver bullet that says, that on the life insurance, this is going to be massive.

For me on the life insurance, it’s really going back to the basics. We need more agents, we need to work with more banks, and we need to work with brokers. We can get more business from our traditional distribution channels.

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There is this understanding that mobile phones can deliver innovative products and help insurers scale their products. It doesn’t seem to work from what you are saying.

That is the theory, but reality is different. What I’ve seen in Tanzania with Vodacom, for instance, is that the sale of motor insurance with mobile money is much more popular than life insurance.

On the life insurance side, for the so many years I’ve been in the industry, we always said that life insurance is sold, not bought because people don’t get up in the morning and think, ‘I must buy a funeral policy or I must buy life insurance policy.’ But when they come with a car, they are going to ask who’s going to pay when I make an accident because I need that car tomorrow to go to work.

Although we talk about insurance generically, I think there is a difference in the buying patterns of people when they buy life insurance and how they buy life insurance, and how and when they don’t buy life insurance.