Zep Re is set to expand its operations further in Rwanda with a new office in the capital Kigali, after 18 months of preparation and government approvals.
The government of Rwanda has a 6% share in Zep Re, explained CEO Hope Murera, and the company already has market leadership in the east African country. “The move to open an office is very important to us,” said Ms Murera, “as it enables our goal of financial inclusion in our member countries.”
Zep Re has already been involved in schemes to build pensions and also to support mortgages allowing the financially disadvantaged to get onto the housing ladder.
Through Sonarwa Life, it has 100,000 people under cover and aims to grow this figure to 500,000 in the next year, said Ms Murera. The group is already in discussion with the Rwanda Ministry of Agriculture about products to support the sector, through its share of Acre Africa. “We want to support the government in derisking agriculture and the many workers in the sector,” she said.
To access the market, Ms Murera said online products will be important but it will also be critical to have hybrid services to help spread the message about the value of insurance. “Zep Re invests into member countries supporting infrastructure development,” she said. The new office will open in Kigali Heights and the group is about to appoint a resident underwriter and manager, with plans for a formal launch in the first quarter of 2022.
Looking at the state of the reinsurance market overall, she said, Zep Re had gone to the international markets early in 2021 in anticipation of the hardening global conditions for the reinsurance sector and had fared a little better than others, according to Ms Murera. It saw a 5% to 7% increase on retro business, compared to increases of up to 15% in places on the continent.
“This year, we also went to the market early but we are still seeing prices go up 20% to 30%. It has also taken a lot longer than we expected. It is obvious that Covid-19 exposure was quite big. Excluding South Africa, we have about $2m on life and about $1m medical in claims.”
Added to price, it is also about capacity disappearing, which means demand is outbidding supply, which is impacting the price too. Considering the appetite for African business, Ms Murera said: “It is a mixed bag. There are some people who see the opportunities and others where Africa is not their major market, so when things are bad they want to stick to the markets they know better.”
“We have seen even major players choosing to pull out of business, but it is not necessarily just because it is an African business. It is tight around cyber but also around marine. We have seen medical drying up and life tightening, for example around cat covers.
“And, of course, there are not the same Covid exposures because of exclusions but there will be tightening around business interruption, for example,” she said. Added to this, she said regulators are pushing for Covid-19 claims to be covered.
Overall, she said: “2022 is still hanging in the balance. We thought there would be clarity, but it is a tough business to be in.”
Last year, Zep Re signed up to the UN Principles of Sustainable Insurance and also to the Nairobi Declaration. Ms Murera said the board is very committed in this area and is already working on a new framework.
“This year there will be a drive to derisk the Horn of Africa, working on the value chain and increasing the reinsurer’s role and in having a bigger impact in terms of ESG, through improving risk management,” she explained.
There will also a be push towards ESG at regulatory level through its annual sponsorship of the regulators’ forum. Zep Re is an early adopter, said Ms Murera, but has no intention of resting on its laurels.