Botswana Insurance Holdings Limited (BIHL), the country’s leading asset manager and insurer, said it will unlock shareholder value by launching new products in the market while admitting products by financial institutions will be tough to compete with.
Group Chief Executive Officer, Gaffar Hassam, admitted that looking at the company’s market share, it will be difficult to grow, but said the life division can be grown by introducing new products.
“We (however) still believe there is room for growth,” said the recently appointed Hassam.
The group’s two flagship subsidiaries, Botswana Life and Botswana Insurance Fund Management (Bifm), lead the market although competition and tough economic conditions have eaten into their dominance over the years.
The full year results for the year ended 31 December 2011 saw Bifm’s assets under management growing to P17.8 billion while Botswana Life total premium income stood at P1.74 billion.
Hassam said they are looking at new channels in the New Year just like they did in 2011, including launching products that will compete with those of the financial institutions.
“In Botswana, we will still look into the financial services arena,” he said.
The BSE listed outfit is looking to enter the retail market by launching unit trusts this year in a bid to target retail investors.
The new product will fall under the ambit of Bifm to consolidate costs rather than establishing them as a standalone subsidiary.
Bifm CEO, Tiny Kgatlwane, declined to state the expected volumes of the unit trusts as the competitors might use the information against them.
BIHL is also aiming at expanding outside the country into the region although Hassam admitted it is difficult to penetrate the markets outside the country.
In a bid to enter the region strong, Hassam said they will use the expertise of Sanlam, which owns 53 percent stake in BIHL.
The South African company is one of the largest financial services companies in Africa and operates in 10 countries in the continent.
However, there were concerns in the past that Sanlam’s presence will hinder the growth of BIHL across the continent.
Former BIHL CEO, Regina Sikalesele-Vaka, is one critic who said the Cape Town-based outfit did not allow its subsidiaries to grow into the continent.
“Sanlam does not allow its subsidiaries to expand into the rest of Africa as they would be in direct competition with Sanlam,” Sikalesele-Vaka said at her farewell ceremony. “The expansion will be done by Sanlam through appropriate partnerships to prevent leakage to minorities.”
She added that Sanlam gave BIHL an undertaking to establish a vehicle for regional expansion with BIHL, in 2008, but despite that, Sanlam has expanded into Malawi, Uganda, and Nigeria and has plans to expand into several other countries in Africa.
BIHL expansion into the continent has had problems as seen by the empowerment laws in Zambia.
Bifm was forced to reduce its shareholding on their investment in Zambia, a consequence which was evident its recent financial performance.
The group was hard hit by investments in Zambia as reduction in shareholding saw fee income falling by 19 percent from P137.3 million to P111 million.
BIHL concluded the reduction of shareholding in African Life Financial Service from 70 percent to 49 percent in March 2011 to meet the regulatory requirements in Lusaka.
The move followed a tough stance by the Zambian authorities barring foreign-owned fund management companies to own more than 49 percent in local companies.
Despite the recent resignation of key personnel from the group, Hassam is bullish BIHL remains an employer of choice.
The company lost high profile managers including Sikalesele-Vaka, Sipho Showa, Simon┬áIpe, Chief of Special Projects, and Victor Senye, ex- head of Bifm, Seagiso Ramatshaba, and former Chief Financial Officer at Bifm, Kenneth┬áBogatsu, and ex- Financial Manager at Botswana Life, Tutu Lenong, former Marketing┬áand Communication manager at Botswana Life.┬á
“If you look overall, there were changes in personnel. But overall turnover still remains at 2 percent,” said Hassam, adding the board is aware that retaining staff is crucial.