Marcopolis presents the Ghana Report focused on investments, doing business, economy and other topics featuring interviews with key executives and government officials. The sectors under review are agriculture, banking, energy, industry, telecom, IT, real estate and more.
Interview with Steve Kyerematen, Directeur General of Activa International Insurance
How is the current economic situation impacting the insurance sector in Ghana?
The impact of some microeconomic fundamentals have been quite significant in the operations of insurance companies. Let's look at the currency, for example. If your company is owned by a foreign interest, they of course expect returns denominated in foreign currency. You could be doing very well in local currency, but when they evaluate in foreign currency, you might not be doing that well. So we think that's a point of concern. Last year, we grew by 22%. But obviously in foreign currency, the effect would not be the same. So, yes, the economic situation in Ghana has a significant impact on our activities as insurance companies.
What are the key insurance trends in 2015? Are there any new products being introduced?
The most significant development on the insurance market in Ghana is the entry into the market by big league Western insurance companies. In the life insurance sector, we have seen the entry of Prudential UK. It's the largest life insurance company in the UK. Already, we've had Old Mutual from South Africa coming into the market. We've had Metropolitan Life. We've had Sanlam. Sanlam is the largest life insurance company from South Africa. There is a similar trend also in the non-life sector. Santam have invested in Enterprise Insurance Group. We have also heard of inquiries from AIG and other such companies. So you have to ask, what is the expectation that these foreign, big league insurance companies have in coming into Ghana? Obviously, they are looking for growth, even if the volumes are not significant. In Ghana, the life insurance market, for example, has been growing at 35% per annum. The non-life insurance market has been growing at 20-25% per annum. So, by any measure, that's quite interesting. And although the volumes here are not significant in comparison with that found in the big foreign markets, it is sufficiently interesting to attract them into the market. Ghana has experienced a worsening of the progress that we have been making quite recently, in the sense that the economy’s rate of growth has gone downhill. But at 4.5%, even 4% per annum, compared to what you see as far as European economies are concerned, is also quite interesting. Foreign insurance companies who have shown interest in Ghana’s insurance market have been looking at these factors: economic performance, political stability, the criminal justice system, rule of law.
Does Activa plan on moving away from its core corporate insurance into life insurance?
Getting into life insurance is one of our objectives. It’s a short-term objective. We prefer to buy an existing life operation, rather than start a brand new operation. We think that sometime next year we’ll have a life component in our portfolio.
Foreign insurance companies who have shown interest in Ghana’s insurance market have been looking at these factors: economic performance, political stability, the criminal justice system, rule of law.
In regards to Activa’s partnership with Coface—the top insurer in the world—, what are the developments on the side of the export credit insurance, and what is its role in increasing Ghanaian exports?
Let’s look at this from two angles. The first is, as you said, export credit insurance. Exports are critical to the economic well-being of countries such as Ghana, and therefore export credit insurance is also more or less a service which the export sector could easily take advantage of. But our relationship with Coface, for the moment, is more in invoice discounting facilities in the market. Activa is the only company in the market with a license to do credit insurance. Activa'a mother company, Activa Assurance in Cameroon, already has a relationship with Coface in Cameroon. And then Coface also has a relationship with Assinco, which is an insurance company in Gabon. So Coface thought that they would look for the right partner to come and introduce their products in Ghana, and they selected Activa. We have been successful in acquiring a license to do credit insurance. While we are talking about financial insurances, we should mention that Activa also partnered with Factors Chain International to host the first ever factoring conference in Africa in Ghana. That was two years ago.
The second angle concerns partnership in element. Our business model depends a lot on the partnership that Activa has through the Globus Network with major Western insurance groups, such as Zurich Insurance Group, ACE Group from the United States, Generali, the If P&C Insurance from Scandinavia, QBE Insurance, XL Catlin. These are major players. These international insurance companies have clients who are international investors, and they have operations in various markets in Africa. Certainly they want to be compliant with local laws, so they know when these clients come into the various African markets, they must insure with local insurance companies. In order to make sure that they would have the same quality and security of insurance services that they provide to their clients in their home markets, they look for local insurance companies who can deliver a similar quality of insurance products to their clients who are doing business in these local African markets. Thus it is for this reason that the Activa Insurance Group has been very successful in attracting partnerships with all these major insurance companies. We are the preferred provider for corporate multinational companies in Ghana.
So Activa gets recommended to these multinationals by the big foreign insurance companies?
Does Activa also reinsure in this way?
Yes, exactly. The partnership involves reinsurance back to the multinationals.
Last November, Activa was selected as the best company in the financial services sector at the Third Annual Association of Ghana Industries (AGI) Awards. So what makes Activa the best insurance company in Ghana?
Our forte is corporate insurance. Whatever mechanism the member companies of the Association of Ghana Industries use in arriving at preferred providers of insurance companies, clearly they came to the conclusion that Activa really meets the expectations of industrial companies in Ghana in terms of standards, quality of service, and security of insurance coverage.
Will Activa be introducing new products to the market soon, and if so, what will the underlying strategy be?
One of our advertising themes is that we are well-known for innovation. We've been in discussion with a company called MicroEnsure. This is a company that has support from the IFC and some major insurance companies. Basically, the aim is to roll out micro-insurance products in Ghana. So as soon as the discussions are completed, the product that we are going to launch is coverage for mobile phone appliances, accidental damage to mobile phones. This would be the result of collaboration between Activa, MicroEnsure, and Airtel. It’s still under discussion, but as far as new products in the pipeline are concerned, this type of cover would be one of them.
And this cover is not yet present in Ghana.
No, it is not.
Let’s talk about you personally. You won the 2015 NYUPED National Achievers Award as part of your social responsibility activities. How exactly do you contribute to the development of Ghanaian society, especially the poor and underprivileged? What has been your personal contribution?
In my role as a leader of my company, I have made it a point for the company to invest in corporate social responsibility activities. One which gave me a lot of pleasure was contributing 25 computers to the National Cardiothoracic Center. At the time, the Center was in dire need of computers to make the cardio care service more efficient, and so the computers were well-appreciated by them. For quite some time, we have also been supporting the Sports Writers Association of Ghana. Because while Ghana has made progress to become a lower-middle income country, economic fortunes still leave room to be desired. I think sports are quite important to our social and economic health, and that is why as a company we have been supporting the activities of the Sports Writers Association of Ghana. And for me, personally, there is a desire to support needy students as much as possible through the Northern Youth League.
What is your vision for the company?
When we took over the operations of a South African-owned company in 2009, we said that we wanted to become one of the three largest insurance companies in Ghana. We are still on course. Our business model so far has relied on corporate insurance, and we have been somehow very slow in developing the retail side of our business. However, as mentioned earlier, we are preparing to launch this micro-insurance product. Alongside that, we have reintegrated a retail and agency management business unit in the company. We believe that, with the success we expect to achieve on this new retail side, we are definitely going to achieve our target of becoming one of the top three insurance companies. This confidence is also born out of our utilization of modern professional management tools. As a company, we have a flat structure. We operate on the basis of a strategic business unit, and all our employees get opportunities for training and mentoring in order to deliver on the tasks assigned to them. Therefore, with the quality of the team the company has, there's no reason why we should not achieve our objectives.