1. The African Connection
Organised by Kring Internationaal
Johan de Witthuis, Utrecht, 13 October 2016

2. Welkom
Welcome Karibu Witaj Wilkommen Bienvenida Bienvenu Bem-vindo Velkommen Benvenuto Välkommen Tervetuloa Dobrodošli

3. Program
16.30 Doors open
16.45 Welcome and introduction of the guests by Caroline Tuin, Chairperson Kring Internationaal
17.05 Insurance in Africa, by Mark-Anthony Macharia
17.45 Africa Rising, by Andrew Slater
18.25 Q&A
18.35 Closing drinks and networking opportunity
Doors close

4. Welcome and introduction of the speakers
Caroline Tuin

5. Agenda
Welcome
Introduction of our guests

6. to the 5th meeting of the Kring Internationaal
Welcome
to the 5th meeting of the Kring Internationaal

7. Introduction of our guests
Mark-Anthony Macharia, FSA CERA:
Mark-Anthony currently works in the Enterprise Risk Management team at NN Group. Originally from Kenya, Mark-Anthony has worked in both consulting and industry in the United Kingdom and in the Netherlands primarily focused on the calculation and reporting of Economic Capital.

8. Introduction of our guests
Andrew Slater:
Managing Director, RisCura UK
MA Mathematics, Fellow of the Institute of Actuaries, CFA Charterholder
Andrew is the Managing Director of RisCura’s UK operations, based in London.

9. Africa: insurance and pensions
Andrew Slater
13 October 2016

10. Introduction: Andrew Slater
MA Mathematics, Fellow of the Institute of Actuaries, CFA Charterholder Andrew is the Managing Director of RisCura’s UK operations, based in London. In Andrew’s 20-plus year career in investment, he has worked with pension funds, insurers and wealth management institutions around the world. During that time Andrew deliberately sought out the areas that presented a challenge to the orthodox. He started at Price Waterhouse where he qualified as an actuary. A switch to asset management followed with multi-manager SEI Investments. Immediately before joining RisCura in 2012, Andrew was with Dutch risk adviser Ortec Finance. At RisCura Andrew’s time is split between promoting RisCura’s expertise in African investment to institutional investors in Europe, and participating in RisCura’s expansion across the African continent working with local investors. Andrew has a particular focus on establishing the RisCura business in Nigeria which he visits regularly. Andrew is alumnus of Cambridge University (undergraduate MA in mathematics and postgraduate MMath in theoretical physics) and London Business School, a Fellow of the UK Institute and Faculty of Actuaries, an Affiliate of the Actuarial Society of South Africa, a Fellow of the Zambian Actuarial Society and a CFA Charterholder. Andrew was elected to Council in June 2016.

11. Introduction: RisCura
RisCura is a global, independent investment advisory and financial analytics firm that specialises in Africa. RisCura provides investment solutions to institutions looking to prudently invest their assets to meet their investment goals and create wealth in a sustainable and targeted, risk managed way for beneficiaries. As Africa’s premier investment consultant, RisCura provides a wide range of services to the largest African investor base in listed and unlisted African investments on the continent.

12. Agenda
Growth in Africa
Pension and insurance
On the ground

13. Quiz
For employees in Nigeria, what is the compulsory minimum joint contribution rate (employee and employer) to a defined contribution pension plan, expressed as a percentage of salaries?
Up to 5%
5%+ but less than 10%
10%+ but less than 15%
15%+ but less than 20%
20% or more

14. Agenda Growth in Africa Pension and insurance On the ground

15. African GDP growth rates 2013 vs 2014

16. Continent can be divided into 9 meaningful markets
Central Africa
East Africa
Egypt & Sudan
Francophone West Africa
Maghreb region
Nigeria
Other West Africa
South Africa
Southern Africa excl. SA
Source: RisCura

17. EDFI investment in ACP region is increasing
EDFIs global distribution 2010 and 2013
Africa Caribbe-an & Pacific
Meditte-ranean Countries
Source: EDFI Annual Reports, RisCura analysis

18. DFI into Maghreb equivalent to almost 3% of its GDP
African regional DFI vs. GDP
Franco-phone W. Africa
Source: ODI (Kingombe, Massa and te Velde) 2011, RisCura analysis

19. How Africa’s regions compare
Sources: World Economic Outlook Oct2014 (GDP and population); Index of Economic Freedom (FDI Inflow); Trade Map (Intraregional trade); IESE Business School (Ease and Attractiveness).

20. Domestic consumption is fairly well diversified
GDP (nominal GVA) output by region (2014)
Franco-phone W. Africa
Source: BMI Research, RisCura analysis

21. Large reliance on extractive industries for exports
Breakdown of regional exports (2013)
Franco-phone W. Africa
Source: Trade Map, RisCura analysis

22. Exports concentrated on mineral products
Value of exports by product (least to most diversified) (2013)
Franco-phone W. Africa
Source: Trade Map, RisCura analysis

23. High concentration of trade with Western Europe
Africa’s major trade partners by exports and imports (2013)
Source: Trade Map, RisCura analysis

24. Agenda
Growth in Africa
Pension and insurance
On the ground

25. A youthful continent Median age of populations across regions
Franco-phone W. Africa
Africa Regions
Source: CIA World Factbook, RisCura analysis

26. Population of sub-Saharan Africa
2050
2013
Source: World Bank, RisCura analysis

27. Population of the world
2050
2013
Source: World Bank, RisCura analysis

28. Social security in Africa: pension fund assets
Source: Regulator annual reports and websites, other industry sources, EAC review of pension sector (Callund Consulting), Towers Watson Global Pension Study 2015, RisCura analysis

29. African pension assets growing quickly
Annualised growth rates (local currency) vs. Asset as a % of GDP
Source: Regulator annual reports and websites, other industry sources, EAC review of pension sector (Callund Consulting), Towers Watson Global Pension Study 2015, RisCura analysis

30. Significant allocation to fixed income in Nigeria and E. Africa
Asset allocation of pension funds across Africa
Source: Regulator annual reports and websites, other industry sources, EAC review of pension sector (Callund Consulting), Towers Watson Global Pension Study 2015, RisCura analysis

31. Potential for insurance growth
Penetration and expected annual growth in AUM by region
Franco-phone W. Africa
Source: Swiss Re, UN Population Division, IMF, African Insurance Organisation, NKC Research, S&P Capital IQ, RisCura analysis

32. Insurance AUM in Africa
Source: Swiss Re, UN Population Division, IMF, African Insurance Organisation, NKC Research, S&P Capital IQ, RisCura analysis

33. Significant growth in insurance AUM expected
AUM by region in 2012 and 2018 (projected)
Franco-phone W. Africa
Source: Swiss Re, UN Population Division, IMF, African Insurance Organisation, NKC Research, S&P Capital IQ, RisCura analysis

34. Agenda
Growth in Africa
Pension and insurance
On the ground

35. Business languages in Africa

36. Two major social security providers in Nigeria!

37. Regulation A “solvency 1” approach is the norm
East African common financial legislation
South Africa implementing Solvency Assessment and Management (SAM)

38. Non-life dominates, but life growing fast
Source: African Alliance Capital Markets

39. Reinsurance

40. Industry consolidation

41. The challenge is culture
Insurers not trusted
Policy fraud
Non-payment of claims
Rainy-day savings for life’s adverse events
Assistance from family network

42. Risk based supervision a long way off

43. Francophone Africa
Source: Renata De Leers, CEO ACB Consulting TOGO

44. Francophone Africa
Renata De Leers, CEO ACB Consulting TOGO

45. The informal sector Micro insurance Micro pensions Technology
Leapfrogging
Informal sector financial inclusion
New “micro” legislation
“Reverse” innovation?

46. Demography

47. Mortality
Source : United Nations, Department of Economic and Social Affairs, Population Division (2011) World Population Prospects: The 2010 Revision

48. Annuities

49. Africa's 'new oil' is going to be the wealth of its soil
High-five for Africa
African Development Bank President Akinwumi Adesina
Africa's 'new oil' is going to be the wealth of its soil

50. Thank you
riscura.com/BrightAfrica

51. Q&A and discussion

52. Disclaimer
This document contains confidential information and is protected by copyright law. Copyright in all information, material and logos are protected by both national and international intellectual property laws. Accordingly, any unauthorised copying, reproduction, retransmission, distribution, dissemination, sale, publication, broadcast or other circulation, or exploitation of this material will constitute an infringement of such protection. The copyright in all material of RisCura Holdings (Pty) Ltd (“RisCura”) and all its subsidiaries shall continue to vest in RisCura. The information contained in this document is provided ‘as is’ without warranty of any kind. The entire risk as to the result and performance of the information supplied in this document is assumed by the user and in no event shall RisCura be liable for any direct, consequential, or incidental damages suffered in the course of using the information contained herein as a result of the use of, or the infringement of any copyright laws. RisCura Solutions (Pty) Ltd and RisCura Invest (Pty) Ltd are authorised financial services providers.

53. Insurance in Africa
Insurance in Africa

54. Agenda Africa Some Statistics Current Situation
The Four Different Regions
Microinsurance
The Future in Conclusion
Insurance in Africa

55. Agenda Africa Some Statistics Current Situation
The Four Different Regions
Microinsurance
The Future in Conclusion
Insurance in Africa

56. Africa Is Not A Country
Insurance in Africa

57. ......It’s A Continent
Insurance in Africa

58. Agenda Some Statistics Africa Current Situation
The Four Different Regions
Microinsurance
The Future in Conclusion
Insurance in Africa

59. Some Statistics (2012) Total Premium per Country
Penetration Rate = Gross value of Insurance Premiums/GDP
Premium per Capita
Region
TotalPremiums (US$billion)
PenetrationRate (%)
PremiumsperCapita(US$)
Advanced Asia
936 12
4,388
North America
1,393 8
3,996
Western Europe
1,463
2,716
Oceania 97 6
2,660
South & Central America
169 3
282
Central & Eastern Europe 73 2
223
Middle East 41 1
124
Emerging Asia
369
102
Africa
72 (17)
4 (1.04)
66 (16.5)
World
4,613 7
656
Insurance in Africa

60. Some Statistics (2012)
Life insurance penetration rate (excluding South Africa) is 0.27% with a density of US$5 per person per year
Within the continent only South Africa, Namibia, Mauritius and Botswana have a spend more on life insurance over Non-life Insurance.
Non-life insurance is slightly more popular with a penetration rate of 0.64% US$12.5 per person per year
Insurance in Africa

61. Agenda Current Situation Africa Some Statistics
The Four Different Regions
Microinsurance
The Future in Conclusion
Insurance in Africa

62. Current Situation Financial industry still has some modernising to do
Access to money through a formal bank network can be difficult
High interest rate and account charges by banks
Insurance in Africa

63. Current Situation Lack of trust in financial institutions
Community comes to the aid of people in times of need
Lack of reliable data on mortality and longevity and skilled insurance personnel
Lack of big multi-national players
Shallow financial markets make it difficult to raise enough money to capitalise insurance/re-insurance companies
Non-life insurance is slightly more popular than Life
Insurance in Africa

64. The Four Different Regions
Agenda
Africa
Some Statistics
Current Situation
The Four Different Regions
Microinsurance
The Future in Conclusion
Insurance in Africa

65. West Africa (Ghana) 89% of the population are uninsured
Lack of payment of premiums was an issue.
Sale of insurance on credit was common practice
No premiums no cover policy was introduced to end this
Huge issue as it stopped insurers from paying out claims and reinsurance (increased credit risk)
Compulsory fire and commercial building insurance introduced in 2006
Funeral cover – funerals are a social event in Ghana
High cost of funerals. On average cost is $7000-$8000 dollars however those in the business believe that the “Average funeral should cost between US$15,000 and 20,000”
Insurers from South Africa, Morocco and the UK have entered the market
Insurance in Africa

66. North Africa (Morocco)
Conventional insurance forbidden in Islam
Takaful insurance industry on the rise
Second largest insurance market in Africa after South Africa
Huge growth seen between 2006 and 2014 (about 6% p.a.)
Mainly driven by non-life insurance premiums
Car insurance the largest portion of this
Physical injury (17%) and work-related injury (12%)
Life insurance segment still lagging behind
New Islamic law introduced which will foster growth
Insurance in Africa

67. East Africa (Kenya)
Industry dominated by non-life insurance (Over 60% of premiums)
41% of this insurance in car insurance
Medical Insurance just over 20%
Fire insurance 10%
Life insurance penetration is 0.94%
South African companies well represented.
Penetration rate higher than in most countries. Mainly due to innovation
Bancassurance also on the rise, less underwriting needed
Disadvantage – brokers lose out on jobs
Insurance in Africa

68. South Africa (South Africa)
Exception to the rest of the rest of the continent
Has a well developed life insurance industry
Life insurance accounts for 81% of all insurance premiums (rest of the continent only accounts for 29.5%)
High level of competition with the insurance market
A highly developed financial industry
High level of risk awareness
Market nearing saturation
Companies now venturing into the rest of Africa
Lots of new business coming from the rest of Africa
Insurance in Africa

69. Agenda Microinsurance Africa Some Statistics Current Situation
The Four Different Regions
Microinsurance
The Future in Conclusion
Insurance in Africa

70. Micro Insurance
Insurance targets the a small, wealthy, part of the population
Leads to a situation where a large part of the population is left unprotected
Gives a need and an opportunity for micro insurance
Microinsurance is insurance with low premiums and low caps / coverage
Mobile Phones and the start of mobile money transfers, proved to be a game changer
Microinsurance makes it possible for people to take more risks. When farmers are insured against a bad harvest (resulting from drought), they are in a better position to grow crops which give high yields in good years, and bad yields in year of drought. Without the insurance, however, they will be inclined to do the opposite; since they have to safeguard a minimal level of income for themselves and their families, crops will be grown which are more drought resistant, but which have a much lower yield in good weather conditions.[5]
Insurance in Africa

71. M-Pesa
M-Pesa is a money transfer service where users can use their mobile phones to store and transfer money
Developed in 2005 but launched in 2007 after the regulators had conducted the required due diligence
Insurance in Africa

72. M-Pesa
Central Bank of Kenya (CBK), Communication Authority of Kenya and Ministry of Finance then assessed all associated risks before commissioning the project
The CBK put in measures to ensure that minimum standards were met
Loose regulatory structure which facilitated the development and success of the system
Safaricom operates under a special license from CBK, whose conditions are more relaxed compared to those of banks and other financial institutions
Insurance in Africa

73. Airtel Insurance (Kenya and Ghana)
Open to anyone between the ages of 18 and 75
Cover linked to recharging of airtime for pre-paid customers and usage for post-paid customers
For prepaid customers, cover is based on monthly recharge not usage
Cover includes:
Death
Accidental Permanent Disability
Hospitalisation
Waiting period of one month for which only death by accident is covered. After first month full cover is given
Payment made through company money transfer service for which registration is required
Hospitalisation has to be for at least 3 continuous nights
Insurance in Africa

74. MTN (Nigeria)
Users can buy the insurance directly from their mobile phones
No underwriting
Agreed cash payment to a named beneficiary of a deceased subscriber, or to a subscriber in the case of permanent disablement as a result of accident
However, there is no cover for demise/total permanent disability resulting from natural causes during the first 30 days of subscription
Minimum age of entry 18years, maximum 60 years
Insurance in Africa

75. Kilimo Salama (Kenya)
Offer farmers who plant on as little as one acre insurance policies to shield them from significant financial losses when drought or excess rains are expected to wreak havoc on their harvests
Payout based on severity of weather conditions measures by specific weather stations
To be insured one has to be within 20kms of the weather station
Premium paid when inputs are being purchased. Suppliers register their insurance and the farmer gets a notification on their phone
Insurance in Africa

76. Barclays Bank (Kenya)
Current Account, which attracts a flat monthly single fee to cover your day to day banking transactions and offers embedded retrenchment, funeral and hospital cash back insurance
Funeral Insurance plan that Covers funeral expenses of up to 5 family members in addition to the account holder – Spouse, Parents and parent In–Laws
Accidental Hospital Cash Back cover
Travel Insurance embedded on the International debit card – offering many benefits including Medical & Repatriation Expense cover
Retrenchment cover which pays 3X your monthly salary 
Insurance in Africa

77. The Future in Conclusion
Agenda
Africa
Some Statistics
Current Situation
The Four Different Regions
Microinsurance
The Future in Conclusion
Insurance in Africa

78. The Future in Conclusion
Insurance in Africa

79. QUESTIONS??

80. The Australian Connection
Next event
6 April or early June 2017 (date to be confirmed)
The Australian Connection

81. Please join us for drinks and talks