• BIHL expands to general insurance
• Targets banking as an indirect investment
• BIHL to intensify African expansion
Chief Executive Officer (CEO), Gaffar Hassam of the Botswana Insurance Holdings Limited (BIHL) has allayed fears that his company, in its latest acquisition, is looking to monopolise the insurance sector going against the Competition Authority’s (CA) regulatory requirements. Hassam said BIHL is pro-competition and was far from becoming an insurance monopoly.
BIHL recently announced that it was considering a series of transactions which, if successful, would result in the insurance giant acquiring up to 50 percent of the issued share capital of Teledimo Proprietary Limited, a company which directly owns 50 percent of the shares in Botswana Insurance Company (BIC). Director of Communications and Advocacy at CA, Gideon Nkala said last week that the authority was still assessing the merger and had not yet reached a decision on the BIHL merger.
Some observers had opined that BIHL controlled over 80 percent of the life-insurance market, and the acquisition of a stake in BIC, arguably the largest short-term insurance firm, would give the diversified financial services giant dominance of Botswana’s insurance sector, because it would also command the largest share in short-term insurance.
However, Hassam differed. He said even if BIHL were to conclude the BIC acquisition, it will not dominate the general insurance market because even BIC is not a monopoly in the general insurance side. “BIC controls only 23 percent of the general insurance market and it offers different products from its competitors, so should BIHL acquire BIC it will still not be dominant in general insurance,” he said.
Some observers had opined that BIHL controlled over 80 percent of the life-insurance market, and the acquisition of a stake in BIC, arguably the largest short-term insurance firm, would give the diversified financial services giant dominance of Botswana’s insurance sector.
Further, Hassam said through its fully owned unit, Botswana Life, BIHL has always practiced a pro-competition business. He said Botswana Life has never abused the market, either by manipulating prices or fees. “We have always had a fair and respectful treatment towards our clients and policy holders, who also have always had a choice of acquiring similar services from our competition. Botswana Life’s dominance has always been a choice from our policy holders possibly because of superior service,” he explained.
The move to acquire BIC, according to Hassam, is because the financial services company has been doing well in the life insurance sector, but losing out in the general insurance offering. “We want to create a one-stop shop in insurance. We have clients who by choice could access all their insurance needs within the BIHL group, so we are giving them that opportunity,” he added.
He said as another avenue for growth, BIHL will intensify its expansion into Africa. Recently BIHL announced its intention to acquire 25.1 percent of the issued ordinary shares in Nico Holdings Limited, a Malawian diversified financial services firm.
The company is involved in general insurance, life insurance, pensions administration, banking, mortgage finance, lease finance, asset management and information systems, as well as the hospitality industry, real estate holding and shopping centres through its subsidiary companies.
Through its stake in Nico, BIHL will have exposure in NBS Bank Limited, a Malawian based commercial banking outfit, further diversifying the BIHL portfolio into the banking sector.
This is an area within the financial services sector which Hassam says could be one of BIHL’s lucrative diversification options. He however cautioned that BIHL will not directly invest in banking by perhaps starting its own banks since it lacks expertise in that area. “We are into partnerships. We indirectly acquire companies involved in banking,” he said, but did not reveal where else BIHL was planning to expand.
Through its partnerships, BIHL’s 23 percent stake in Letshego Holdings Limited, means that the company is exposed to the micro-lending sector, which further ups BIHL’s revenue streams and value. By broadening its scope to the entire financial services, BIHL’s risk, according to Hassam, is also minimised. BIHL also owns a stake in the Funeral Services Group (FSG), the largest undertaker in the country.