Business News of Tuesday, 24 April 2012Source: GNA LeapFrog Investments, a global impact investing funds company, on Tuesday announced its largest ever private foreign investment in the history of Ghana’s insurance industry.
The US$5.5 million investment will allow LeapFrog to acquire a majority stake in Express Life Insurance Company, a Ghanaian insurance firm founded by Obed Kweku Danquah, Executive Chairman of Express Group of Companies.
Express Life Insurance market share which is below one percent market share in the country is expected to increase significantly with the injection and also meet the new minimum capital requirement of one million dollars for insurance firms in Ghana.
It will also pave way for Express Life to draw on LeapFrog’s capital and distinctive operational expertise, to become the market leader in serving the large untapped market of low-income consumers in Ghana.
Briefing the media in Accra, Mr Doug Lacey, Head of LeapFrog’s operation in Africa, praised Ghana’s economic performance and said the decision to invest stemmed from the country’s macroeconomic achievements that had created a good climate for businesses to thrive.
The name Express Life Insurance would not change, Mr Lacey said, because the Ghanaian company had brand equity in the market, they believed must be maintained.
Life insurance industry has grown at about 40 percent annually, and Lacey believes that, there are still great opportunities in the industry because the vast majority of 25 million Ghananians do not have access to insurance.
“Our intension is to grow the business (Express Insurance business) in Ghana to the level an Initial Public Offer, will be an option in the Ghanaian capital market,” Lacey said.
Quoting LeapFrog’s Founder and President Dr Andrew Kuper, he said: “Investing in Ghana underscores LeapFrog’s commitment to high-growth emerging markets that are home to the billion consumers.”
He added that, to date, LeapFrog had made landmark investments in Africa and Asia, and contributed to the robust operational and financial performance of its portfolio companies; and currently reaches over 8.6 million people.
“…Through Express, LeapFrog aims to empower over 500,000 Ghanaians with financial safety nets and springboards to a better life.”
Express Life Insurance Chief Executive, Mr Obed Danquah said, LeapFrog was bringing both capital and expertise to Express, and that his company believes in building mergers and buy backs. Express hopes to buy back what it had sold out in future.
“Creating positive social impact along with strong financial returns has always been a focus of mine. Given LeapFrog’s profit-with-purpose approach to investing and experience in the insurance industry, they are an ideal partner.
“This powerful strategic alignment will permanently alter the insurance space in the country by setting a new standard for ethical and inclusive provision of insurance to the mass market.
A recent World Bank report titled: “De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Services,” described Ghana’s insurance companies and others within the West African Monetary Zone (WAMZ) as inefficient.
It identified only one company within the entire WAMZ region, Nigeria’s NICON that has a gross premium base in excess of $100 million.
The report, however, noted that insurance regulatory supervisors in Ghana and Nigeria are best staffed and equipped.**