The client
Our client on this assignment was a leading Reinsurer in Eastern and Central Africa, established to grow the local insurance market and to especially stem capital flight through local insurers’ placement of reinsurance with international reinsurers.
Situation
The state-owned corporation at incorporation initially wrote only fire risk, but it has since grown to offer a wide range of reinsurance services to more than 159 insurance companies spread over 45 countries in Africa, Middle East and Asia.
To support and secure the corporation, the company was protected through mandatory cession of 20% of all reinsurance business in the local market. This compulsory cession was, at the time of our initial engagement with the reinsurer, set to be lifted in in two years, which was going to significantly impact the business and was therefore a key strategic concern.
Client requirements
While the corporation was fairly protected as a state corporation, competition from local and regional reinsurers was also increasing with time.
Accordingly, as the year in which the compulsory sessions were going to be lifted approached, the corporation needed to both raise its local competitiveness and dilute its overall exposure to the withdrawal of mandatory cession by getting into international business - both from East Africa and Africa in general, as well as from Asia and the rest of the world.
The business was therefore looking for a suitable advisory firm to take this journey with.
Our approach
We worked with the state corporation to develop a five-year growth and risk mitigation strategy, and having achieved the strategy's objectives for the initial planning period, the corporation retained our services as it changed its focus to profitability and return to shareholders in the subsequent five-year period.
We structured our work on both assignments around the following:
1. evaluation of corporation’s past performance to determine its key performance concerns;
2. engagement with the corporation’s board and management to develop strategic plans for the two successive planning periods;
3. development of detailed strategy implementation and performance management plans;
4. providing ongoing advisory support to the corporation’s CEO, board and management in implementation of strategy;
5. monitoring and evaluation of strategy implementation through the ten-year period.
Significant outcomes
Our work with the state corporation saw the business through a successful and very effective rebranding.
When we started working with the state corporation, 32% of its total premium came from mandatory cessions, which the corporation steadily reduced to under 15% over the ten-year period . Over the same period, the corporation grew its international business as a risk mitigation strategy to from 2.5% to 64%.
Through the ten-year period, the corporation recorded a 10.7% compounded annual growth (CAGR) with gross premiums rising to USD 157M from USD 51M. Net income for the same period grew at an annual compounded growth rate (CAGR) of 4.07% to USD 22.4M.
Specifically in the latter five-year period, the corporation’s total assets grew from USD 329.7M to USD 430.9M (30.7%), and shareholder’s funds from USD 210M to USD 286M (36%).
This was achieved through dedicated implementation of the corporation's strategic plans by the board and management despite the challenges the business faced over the ten-year period, including major changes in International Financial Reporting Standards (IFRS) that put unprecedented pressure on the company's balance sheet.
ARTEMIS Transition Partners
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Sustained growth and profitability to achieve long-term sustainability