National Bank of Malawi buys 26% stake in United GeneraI Insurance Company Limited. (Great news!!)

Why is this great news then? Well for a whole host of reasons and especially for the insurance industry itself and the consumer,

• for starters local shareholding is a great thing in itself!! I have always advocated for this and it shows where we are headed with local participation being a sure thing and I believe we will have regulatory minimum local shareholder requirements coming soon...
• the possibility of bancassurance synergies available to the combination are boundless...
• further this has the possibility of amazing changes to interalia the banking approach to insurance payment systems, cross selling, insurance access etceteras imagine if you may selling insurance products to the vast data base of NBM's client portfolio, saucy!! the challenges bring the drool to mind.....great challenge requiring conversion to success, the drug I feed on.
• and it provides a formidable competition base to the Nico General Insurance Company Ltd outfit which hitherto (2007) held a 47% market share (47%!!) in a country with about 10 licensed insurers, the Nico General has a possible bancassurance angle with NBS Bank which at present from a consumer point of view has nt been fully exploited, mined.... but then again with 47% the motivation may not be as urgent.
• the consumer has a choice with two strong local companies that have a serious approach and credible history, not to say the rest of the competition does not.
• Career development for insurance staff in Malawi as a whole is not effectively exploited and with the Zim connection and more may bring a sharing of intellectual capacity which would benefit the consumer and bring much needed vibrancy.
• Whilst we have as an industry touted some products as new on the market, innovation has not been a strong point for the industry and sharing with the general insurance industry in countries with higher insurance penetration and higher level of sophistication in innovation is a great thing
• Great news!! Exciting news!! it takes the boring out of insurance, what next? the capacity of local management is in the driving seat, age old traditions may require unseating, staff may require retraining, consumer expectations may be at an all time high, all great for the Malawi insurance industry, my! my! we live in exciting times....

-Brian

Article by MOSES MICHAEL-PHIRI (5/22/2008) below, The NATION Malawi online

Printable View
All Moses's Articles
Send to friends
Send note to Writer

National Bank of Malawi (NBM) on Tuesday made a landmark acquisition of 26 percent stakes in short-term insurance company United General Insurance Limited (UGI) in a move that means UGI will now be co-owned by NBM and ZimRe Holdings of Zimbabwe which owns 74 percent shareholding.

Before this purchase, UGI was a wholly-owned subsidiary of ZimRe Holdings Plc, a diversified group whose head office is in Harare. In Malawi, apart from holding stakes in UGI, ZimRe also owns Vanguard Life Assurance Company Limited.

Announcing the acquisition, NBM chief executive officer George Partridge said both the bank and UGI have met all necessary regulatory approvals from the Reserve Bank of Malawi (RBM) and the Registrar of Insurance Companies.

Partridge said for NBM, the acquisition is a dream come true as it is in line with the bank’s vision to be successful in the country and the region at large. "The acquisition fits in well within the National Bank’s own vision, mission, diversification and expansion strategy within the financial services industry both local and in the region. "It is also one step further in our quest to become a near universal bank by offering a one stop shop of financial products in all our service centres," said Partridge. He indicated that it is envisaged that this development and relationship with UGI will be more than that of an equity investor. "We want to be an active investor so as at operational level both NBM and UGI will realise certain synergies. In fact, in future we plan to list this company on the Malawi Stock Exchange," said Partridge.

With this acquisition NBM will now be able to offer affordable packaged financial products and structures such as bank assurance services. In his remarks, Albert Joe Nduna, ZimRe chief executive officer and chairman of UGI, said he was excited that the insurance firm has found a trusted partner that is committed to growth of the company.

"This is the beginning of great things to come between ZimRe and National Bank. ZimRe has been in the Sadc [Southern Africa Development Community] region for the past 24 years and we are a diversified group. We have been looking for a partner to put up a strong relationship in the region and in NBM we have found a strong partner," he said.

NBM has other notable investments in Stockbrokers Malawi Limited (SML) and the Malawi Stock Exchange (MSE).

NBM is owned 51.73 percent by Press Corporation Limited as its majority shareholder, Old Mutual with 24.83 percent, the public 22.03 percent and the employees hold 1.41 percent through the Employee Share Ownership Programme.