Prudential Financial is expanding its reach into Africa with the launch of a $350m investment fund in partnership with private equity group LeapFrog Investments.
LeapFrog will manage the fund in a separate vehicle and will target investments in life insurance companies in leading economies on the continent, including Ghana, Kenya and Nigeria, over a three- to five-year period.
US-headquartered Prudential Financial has more than $1.17trn of assets under management while LeapFrog Investments, a Mauritius-based investor in emerging market financial services, has more than $1bn invested and committed by global investors.
Charles Lowrey, chief operating officer of Prudential's international businesses, said Africa "offers tremendous potential for growth over the long term. We are delighted to partner with LeapFrog Investments, given their deep experience in Africa, and their impressive record of success as insurance investors focused on emerging consumers."
Dr. Andrew Kuper, founder and CEO of LeapFrog Investments, said, "The global insurance industry is looking for ways to close the protection gap for millions of people in emerging markets. This partnership will help address that need, while tapping some of the world's highest growth markets."
"We will target large, well-established life insurers, primarily in Ghana, Kenya and Nigeria," Stephen Bowey told Insurance Asset Risk. "All three markets are expected to see significant growth in life premiums over the next 10 years." He quoted an EY report (Waves of change: Revisited, Insurance opportunities in Sub-Saharan Africa, 2016), which says that life insurance penetration rates are low in these countries (Nigeria < 0.1%, Ghana <1%, Kenya roughly 1.0%). Annual insurance (life plus non-life) premium growth is projected to reach 10% in Nigeria, and 9% in Ghana through 2018. Even Kenya, a more mature insurance market is expected to achieve a compounded annual growth rate of 6% through 2018. In most Sub-Saharan market, non-life insurance premiums represent at least 65% of the total premium income: the potential to increase life insurance sales is particularly noteworthy.
LeapFrog will take larger stakes for longer periods of time, in more established companies than in it does in its other private equity funds.
Prudential is an investor in LeapFrog's most recent private equity fund, and also a member of the LeapFrog Insurance Innovation Circle, a knowledge-sharing and innovation initiative that convenes many of the world's leading insurers and reinsurers.