The appointment of Kenya’s Jubilee Insurance CEO, Patrick Tumbo, as a director of the largely West African-dominated pan-African Globus Network, marks a significant new era of increased East-West African financial partnership. Kenya’s insurance sector has already recorded the highest growth rate in Africa and the second-highest in the world and profits have been excellent. Could this be the end of Africa’s notoriously low insurance penetration rates? Aamera Jiwaji reports.
Little is known about Kenya’s leading composite insurer, Jubilee Insurance, outside of periodic news stories on financial results and product launches, because of a tightly controlled media strategy. Which is why the August announcement that the company’s CEO, Patrick Tumbo had been appointed a director of the pan-African Globus Network was relatively lost in a pile of corporate press releases.
But it is a significant development for Jubilee and for Africa’s rapidly growing financial services sector, and it signals a new era of increased East-West financial sector partnerships on the continent.
Globus, headquartered in Cameroon, is a network of over 30 insurance companies present in 26 African countries, the majority of which are based in Central and West Africa.
It is the first multi-lingual insurance network (covering French-, English-, Portuguese- and Arabic-speaking countries) to offer harmonised rating solutions for pan-African insurance needs, considerably reducing trade barriers for global investors operating in Africa.
However Globus’s country membership outside of these two major economic blocs includes only Kenya, Tanzania, Uganda, Burundi and Rwanda, and its board has long been the preserve of West African directors.
The president of the board is Richard Lowe, CEO of Activa Insurance in Cameroon. Activa is one of the largest insurance groups on the continent with an additional presence in Ghana and Liberia, and it founded Globus in 2007. Other countries represented on the board include Burkina Faso, Côte d’Ivoire, Congo-Brazzaville and Gabon.
While the strong West African presence on the Globus board could just be an indication of a bias towards the home region, Vimal Parmar, head of equity research for sub-Saharan Africa at corporate advisory group Burbidge Capital, says the step towards wider representation from East Africa may point to Globus’ imminent expansion into the region.
In a 2013 interview with a West African publication, Lowe urged members of Globus to “upgrade their underwriting skills to enable them underwrite ever-more-complex risks, as African countries undertake rapid development in the areas of oil and energy”, suggesting East Africa’s imminent commercialisation of oil and gas reserves may have spurred the network to establish itself more strongly in East Africa.
The potential of Tanzania’s oil and gas deposits (estimated to be 14.5bn barrels) coupled with a low insurance penetration of 0.8% has already identified the country as the biggest opportunity for increased premium generation outside Kenya, according to stockbrokerage Genghis Capital. Other countries that the Globus network is eyeing as it seeks to expand its footprint on the continent include South Africa, Mali, Guinea, Egypt and Sierra Leone.
Jubilee’s Tumbo becomes the first Kenyan director to join the Globus board, suggesting the arrival of East African companies on the pan-African insurance scene and a marked shift in East and West African relations. The choice of Tumbo as the first non-West African director is in itself significant.
Tumbo is a board member of the 46-member-strong Association of Kenya Insurers (AKI); his ties with AKI and now Globus may prompt greater cross-continent tie-ups between insurance member groups.
The singling out of East Africa’s Jubilee Insurance also carries import since by joining hands with a company that has a 77-year heritage, the seven-year-old Globus network is able to leverage on their experience.
Jubilee’s subsidiaries in Kenya, Uganda and Tanzania are already members of Globus, and its company in Mauritius – where the Network does not have representation – may soon follow suit. This effectively gives Jubilee first advantage on pan-African insurance deals and possibly even relegating East Africa’s other insurance companies to second-tier membership.
Jubilee’s presence in the flourishing Mauritian economy, a first for any Kenyan insurance company, may also see Globus cement business connections between the Francophone country and Africa.
The appointment distinguishes Jubilee in a highly competitive industry that is engaged in expansion of geographic markets and product portfolio. Various initiatives have been launched in the last decade as insurers try to tap into new markets and increase low levels of penetration,which hover around the 2 and 3 percentile mark in East Africa. Kenya leads with 3.2%.