Raimund Snyders, the chief executive of Mutual and Federal, says that the insurer can increase its market share from the current 11 percent by taking advantage of its relationship with Old Mutual and Nedbank. Picture: Simphiwe Mbokazi
By: Siseko Njobeni
Johannesburg – Mutual & Federal (M&F) wanted to tap into existing customers within the Old Mutual Group to lift its market share, chief executive Raimund Snyders said yesterday.
Snyders said the company, which is South Africa’s second-largest short-term insurer, could increase market share from the current 11 percent by taking advantage of its relationship with Old Mutual and Nedbank.
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M&F is a subsidiary of the Old Mutual Group and is the only short-term insurance company in the group.
He said the number of Old Mutual and Nedbank customers with M&F insurance was insignificant, at less than 1 percent.
“You sit with a group that has 10 million customers. Just get 30 percent of that to bring insurance to Old Mutual Group and you see market share growth. It is untapped source that is just sitting there,” he said.
In the context of projected slow economic growth in South Africa, the company had to seek growth by capturing market share. He said throughout the world the insurance industry had grown by being part of economies that grew.
With South Africa’s economy expected to grow at less than 1 percent, “you are in for a tough time. The pie is not going to grow. Years and years of data have shown that the insurance industry in South Africa goes with the GDP (gross domestic product). If the economy does not grow, the only way is to take market share,” Snyders said.
The company was taking steps to ensure that it got a share of insurance from large projects in South Africa, he said. “We want more of that insurance to stay in South Africa. It is an area (in which) we absolutely believe we can grow market share and compete with the global players that take business from South Africa. The reality is that it is a volatile class. It is high risk.”
He said insurance cover for such projects “does not even hit South Africa. It goes straight off to the global market,” Snyders said.
Meanwhile, M&F yesterday announced that the Financial Services Board has approved its acquisition of a full stake in credit insurance company Credit Guarantee Insurance Corporation.
In August, M&F increased its interest in Credit Guarantee to 86.1 percent. The firm subsequently made an offer to buy out Credit Guarantee’s minority shareholders, Industrial Development Corporation and Munich Re.
Snyders said Credit Guarantee was a core asset within the Old Mutual Emerging Markets (OMEM) portfolio of property and casualty business.
“Trade credit insurance is well developed in South Africa, so this transaction is an opportunity to drive further expansion on the African continent,” Mutual & Federal said in a statement.
Credit Guarantee would benefit from the OMEM group, in areas such as capital management, balance-sheet optimisation and reinsurance, the company said. “Credit Guarantee has already made a significant contribution to Mutual & Federal’s 2015 results. We look forward to its continued strong performance.” Shares rose 0.60 percent to close trade at R43.95.