Last September Comar, one of Tunisia’s biggest insurance groups, began operations in Côte d’Ivoire.
Comar, one of the oldest private insurance companies in Tunisia will celebrate its golden jubilee next year. It is part of the Amen Group, one of the country’s longest established groups, with interests in a wide range of businesses including financial services (through its bank, Amen Bank and also a number of leasing companies), healthcare, real estate and car dealerships (representing the Audi, Porsche, Volkswagen and Seat brands).
Comar, with revenues in excess of 250m Tunisian dinars ($100m) was the third company in the group to have established a base in Côte d’Ivoire. Three years ago, the group purchased a majority share in Alios Finance, a finance and leasing company with operations in nine African countries (six in Francophone West and Central Africa plus Tanzania, Kenya and Zambia).
Another Amen Group company, Café Bondin, recently opened a coffee shop in Abidjan, intended to be the first of a chain, and is building a roasting facility in the southwest of the country.
More recently a further company from the group, Ennakl, began operations in Abidjan, which has effectively regained its reputation as the economic capital of Francophone West Africa. Ennakl’s car division opened a dealership for Seat in March, having won the right to represent the Spanish carmaker in the Sub-Saharan (SS) African region.
Headhunting a CEO with deep knowledge of the region to lead their expansion into SS Africa, Comar settled on Mustapha Azaiez, a Tunisian who had been based in Burkina Faso for five years while heading Alpha West Africa, the country’s leading insurance group. According to Azaiez, Comar had been considering venturing beyond its borders for a number of years.
The natural choice, as a first step, would have been to expand in Algeria, Libya or Morocco. But those markets proved complicated, especially on the regulatory side, while the regulatory environment in West and Central Africa, according to Azaiez, is well structured, transparent and homogenised.
In the insurance sector, 14 Francophone countries in West and Central Africa are supervised by CIMA (the Inter-African Conference on Insurance Markets) based in Libreville, Gabon. Entering the market therefore proved relatively straightforward. Having initially looked at options to acquire other companies in the market, Comar preferred to start a structure from scratch and build the business organically, given that this would be its first foray into the region.
It took less than a year from creating the company, to getting the licence and starting operations, which commenced in September last year. Comar submitted its application for a licence to operate to the Central Bank in Abidjan in October 2016; the application was then passed on to the regulatory authority in Gabon, which took six months to run through the necessary checks and other due diligence before granting the licence. Comar received full accreditation in June 2017.
Over the first seven months of operations, the company achieved revenues of €800,000. Its aim is to achieve a turnover of €10m in five years’ time.
Excellent potential for growth
Why did the Tunisian company pick Abidjan for its southern expansion? Azaiez explains that Côte d’Ivoire proved attractive for a number of reasons. The clear regulatory requirements and structures and the fact that CIMA covered 14 countries automatically gives the country regional appeal.
The size of the market, nearly four times that of Tunisia, coupled with the fact that another company from the group, Alios Finance, was already established there, made Abidjan the logical platform from which to expand in the region. Equally important in arriving at the decision was the scope for growth in the market.
Studies had revealed that the insurance sector was much smaller than it was in Tunisia, which is itself a small market, and other comparative markets such as Morocco or Kenya. In Côte d’Ivoire, the market represents 1.7% of GDP while in Tunisia, Morocco and Kenya, it’s 1.9%, 3% and 2.8% respectively.
In addition, Côte d’Ivoire’s GDP growth rate is around 8-9%, suggesting that the insurance sector would grow in tandem with economic growth. Azaiez says that with higher economic growth, the demand for insurance services expands both as a percentage of the GDP as well as a greater cultural change by businesses and individuals to take up insurance.
Last year the insurance market grew at 8%, the life insurance market grew at 13% and it is expected to continue its double-digit growth for the foreseeable future. Success however, emphasises Azaiez, cannot be taken for granted. There are a number of large organisations already in the market, including Saham (Morocco’s leading insurance group which was recently purchased by Sanlam of South Africa); Axa, the French global leader and Allianz, in addition to local companies such as NSIA and SUNU.
But Azaiez is confident that Comar has something extra to offer and in many ways has a clear comparative advantage to its competitors. The company is differentiating itself by offering a complete package in terms of the services.
For example, when it comes to health insurance, Azaiez explains, the client will have the option of attending private clinics in Côte d’Ivoire or in Tunisia. As part of the package, clients also automatically get a second medical opinion at no extra cost.
Azaiez says Comar can utilise its group’s extensive network to call upon the best health specialists to give that second opinion even if these are based in Europe or elsewhere. Comar applies a similar model to car insurance wherein it also provides breakdown assistance as part of the package.
The company intends to target both individuals and corporations. For the former it offers buildings insurance as well as car and health insurance. As for corporations, it offers a full suite of services, including more complex services such as insuring against political and terrorist risks.
The relationships already established through Alios Finance will help Comar, according to Azaiez, to gain a quicker foothold in the market than if they had started alone elsewhere.
Level the playing field
One area where Azaiez woud like to see stronger regulatory enforcement is in terms of the premiums being charged by some operators in the market. “We currently observe ‘underpricing’ practices,” he says. “Motor vehicle liability insurance is compulsory and the rates are regulated. There is a minimum set by the regulator that a number of companies do not respect in order to undercut competitors.”
In view of the maturity of the market, he argues, it is not a problem to have a minimum rate, “but it distorts the market and it is no longer a level playing field when others do not follow the regulatory obligations, undercutting unfairly those respecting the law and the minimum set by the regulator.” However, these are teething problems he is confident will disappear once the market becomes more formalised.
To set up operations, Comar had to provide a capital base of €7.5m (CFA5bn), the new minimum requirement set in June 2016. Operators already in the field at that point need to have a capital base of €4.5m (CFA3bn) by 2019 and €7.5m (CFA5bn) by 2021 to keep their licence. Consolidation, he feels, will ensure a smaller pool of bigger players who will adhere to the same rules.
Azaiez believes there is still a great deal to be done in the insurance sector. “We are yet to see the full adoption of technology, for example, like we have in the banking sector.” Regulation, he says has been slow to follow in this area but he is sure technology will play a big part in the future of the sector.
He is keen to point out that Comar has a clear proposition to add to the market. “It’s not just to take market share off others,” he says, “but to offer a different value proposition, to strengthen the competences in the market and to offer clients the know-how we have acquired over 50 years of existence.”
How soon will the company look at expanding continentally? “First we want to establish ourselves properly in Côte d’Ivoire, which is a big market in itself, and then we will consider other markets, and in our expansion will consider all options, both growing organically or through acquisitions,” says Azaiez. The journey has just begun.