Standard Bank Group, Africa’s biggest lender, is targeting annuity to expand in Nigeria as an imminent retirement boom presents opportunities to increase life insurance penetration in the continent’s most populous nation.
Stanbic IBTC Holdings Plc, the Nigerian subsidiary, started an insurance business this year to further diversify from banking and wealth management by selling annuity to retirees of its pension fund, the biggest in the West African nation.
With just 1% of the population having any form of risk cover, Africa’s largest economy has one of the lowest insurance penetrations. That is about to change as an increasing number of people under a contribution pension plan that started in 2004 are set to retire and will need annuity.
“Within now and the next five years, there will be a lot of retirees within the pension business who will need annuity,” Akinjide Orimolade, chief executive for Stanbic IBTC Insurance said in an interview. Life annuity funds for the industry grew 15% to 463 billion naira ($1.1 billion) as of second quarter last year, compared with the previous three months, according to the latest data by the National Insurance Commission.
The local unit of the Johannesburg-based lender holds 1.9 million pension accounts and controls 20.2% of the industry’s 9.3 million individual retirement savings accounts, according to the regulator. It managed 2.3 trillion naira or 37.7% of total contributions received in 2019, according to the latest annual report on the regulator’s website.
By taking over the annuity of retirees of Stanbic IBTC Pension Managers, premium income of the insurance arm will rise to about 30 billion naira by 2026 from 5 billion naira, which will rank it among the top five life underwriters in the nation.
“We see ourselves controlling 10% of the market,” Orimolade said. “We’ll develop new products that will help us in up-selling and cross-selling to the customers we have within the organisation,” he said.
