Ready... steady ... insure

2009-12-05 11:54

KUSENI Dlamini, the man in charge of Old Mutual’s South African

operations, has been a busy man in his first 100 days at the helm.

Since he took over the reins in September from Paul Hanratty, who

headhunted him from London-listed mining group Anglo American, Dlamini has been

to India, Mexico and Colombia to search for business and growth


Dlamini is responsible for Old Mutual’s emerging markets business

which includes these countries plus African operations in Namibia, Zimbabwe,

Kenya and Malawi.

Between these visits, Dlamini has met with the top 350 managers who

report to him and the top 25 brokers.

“I have been clarifying my vision for the group and trying to

understand issues that are important to these teams. This has been an enriching

experience,” said Dlamini.

What he saw on his visits were growing markets with significant

opportunities to service middle- and low-income customers, many of whom are

relatively under-insured.

“India did not enter the economic recession and has been growing at

around 6.5% this year. We want to take advantage of its growing markets,

especially its middle class,” he said this week.

In India, Old Mutual has a life insurance joint-venture business

with Kotak Mahindra Bank. Kotak owns 74% of the business while Old Mutual holds

the remaining 26%.

Another market that holds great promise for Old Mutual is Nigeria.

Dlamini said Old Mutual was looking at ways of exporting some of

the insurance products designed in South Africa to Mexico and ­Colombia.

“These countries have a number of people in the lower echelons of

the society who are being underserviced. For instance in Mexico, you would think

that big American companies are there but they have no presence there.

“We will send some of our guys to Mexico and Colombia to look for

­opportunities,” he said.

Old Mutual inherited the Mexican and Colombian operations after it

acquired Swedish savings firm Skandia for $6.5?billion in 2006.

Dlamini said Old Mutual, which has R458?billion in assets under

management in South Africa, would focus on improving its service to its clients

and keep operational expenses low to boost profits and market share.

“This has been a tough year. Our customers have not been unaffected

by the recession. Despite this our business has been resilient and we are

focusing on retaining our clients and reaching out to them,” he said.

Old Mutual SA’s long-term business made an operating profit of

R1.82 billion in the six months to June this year, slightly lower than the R1.84

billion generated in the same period last year.

Dlamini said there were signs that the global economy was picking

up but “there was a trend of a jobless growth”.

“We need to create sustainable jobs. We need to

incentivise entrepreneurs and support flourishing SMMEs. We also need to

increase our investment in the knowledge intensiveness of our economy and train

both employed and unemployed people to use this as a source of our competitive

advantage,” he said.

He does not expect the mooted tough oversight of the financial

services industry by governments across the world to have a major impact on

insurers because they were not responsible for the credit crisis.

He said: “The

new regulatory regime will apply mostly to banks. Most insurance companies

across the world have not gone bust, except for AIG (American Insurance


Established big banks which invested heavily in risky subprime

assets collapsed because of the credit crisis that started in the US and spread

all over the world.

AIG, the world’s largest insurance group, was saved by the US

­government after it incurred huge losses due to its exposure to the subprime


Subprime lenders

granted mortgage loans to risky, over-extended home buyers.

When interest rates

started to shoot up, the subprime market collapsed, choking off credit.

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