This is likely to be a busy year for Old Mutual’s short-term insurance division, Old Mutual Insure. After buying 51% of underwriting management agency ONE Financial Services Holdings in January, Old Mutual Insure said it continues to investigate acquisition options and opportunities for inorganic business growth.
The insurer, which owns iWYZE, Mutual & Federal Risk Financing (MFRF) and Credit Guarantee Insurance Corporation (CGIC), published its integrated annual report on Thursday. In that report, the company said it has developed an acquisition strategy. It also has “comprehensive partnership plans” to help it drive growth in 2022 and beyond.
“OM Insure will continue investigating acquisition options and opportunities for inorganic business growth. Our current 9% market share gives us a lot of scope for upward movement, particularly in the direct channel,” said the insurer’s MD Garth Napier.
iWYZE is OM Insurer’s direct short-term insurer, selling gap cover, home, car and other short-term insurance products to retail consumers. It also launched direct commercial insurance for small businesses in 2020. It is the smallest business in the OM Insure stable, with R1.14 billion of gross written premiums collected in 2021.
MFRF, the group’s cell captive insurer that offers insurance to corporate customers like Guardrisk, is the biggest OM Insure subsidiary, with more than R1.7 billion in gross written premiums collected in 2021. CGIC, the subsidiary that provides trade credit insurance across the African continent, is the second largest.
OM Insure already commands a substantial market share in the specialist insurance space. It said CGIC’s market share in SA rose to an estimated 80% in 2021.
But there’s still a lot of room for growth in iWYZE. In 2021, iWYZE grew premiums by 12.9% from 2020, even though the direct retail insurance market is highly contested by larger incumbents that have been around before it, banks and new InsurTech players.
OM Insure said iWYZE is “steaming ahead” and has been growing its market share. It had approximately 158 000 at the end of 2021. OM Insure said extending iWYZE’s product offering and partner network to continue gaining market share and making strategic acquisitions are its top priorities this year.
Last year, the company developed on-demand insurance for iWYZE, Comma Insure, which allows customers to activate cover as and when they need it. Since 2020, OM Insure has also entered into several partnerships to distribute its products through channels not owned by Old Mutual. One of those was the partnership with peer-to-peer InsurTech player Pineapple Insurance.
And as OM Insure chase growth through these partnerships and acquisitions, it said it is determined to not fall into the trap of trying to gain market share while shooting itself and shareholders on foot through selling inferior insurance products at discounted cost.
In 2021, OM Insure’s underwriting margin rose to 4.9%, bouncing backing from a loss of 2.6% in 2020. That margin, which gauges the profitability of the business that insurers underwrite, was just 0.4% in 2019. The company’s profit after tax of R729 million was also more than double what it reported in 2019 and even bigger than the R705 million recorded in 2018.-fin24