GRAND REINSURANCE: Balancing Risk Across the Continent

Reinsurance is often more commonly known as ‘insurance for insurance companies’. A vital second layer of protection, it drastically reduces the risk for major insurers of suffering dangerously high losses as a consequence of payments for large claims. It is becoming an increasingly essential tool used by insurance companies to manage risks, and the amount of capital they must hold to support those risks.

Between 2011 and 2020, sub-Saharan, national, regional and international reinsurers achieved an average annual growth in gross written premiums of 9.15%. Despite a challenging operating environment in 2020 marked by the Covid-19 pandemic, volatile oil prices, high inflation, and depreciation of local currencies, the growth potential of reinsurance in sub-Saharan Africa is widely acknowledged as being extremely strong.

Even in such a constraining context, the region is blessed with abundant natural resources and strongly growing economic indicators, alongside a young and dynamic population offering strong insurance growth potential and legislation with is always evolving apace. A rise in infrastructure investment in recent years has also been a sizeable contributing factor in the overall development of the local reinsurance market, a trend that is expected to continue as sustained economic growth and a general tightening of reinsurance rates supports further improvements as stability returns.

PAN-AFRICAN EXPERTISE

Beginning life in 2005 as a local provider of reinsurance solutions to cover all short-term business in Zimbabwe, Grand Re now boasts expertise across agriculture, engineering, fire, liabilities, and motor, and even taking in such specialist fields as marine and aviation. Grand Re today is a wholly-owned subsidiary of Masawara, and part of a much larger insurance group, and the collaborative opportunities that result has afforded Grand Re the stability and security it has needed to continually shift focus and specialism until landing on its ideal configuration, as MD Tatenda Katoma details of its recent history.

“The company has been fully operational now for close to 20 years, starting out with a singular focus on our local market of Zimbabwe,” he harks back to the very beginning. “Over the years, however, this focus changed and in 2014 Grand Re’s structure was overhauled entirely in our bid to become the preferred reinsurer in the sector. As a result, we were propelled from eighth in the market to first position and a key player in the space of just two years. We have always demonstrated the highest levels of service in the markets we serve,” Katoma sums up. “Our reassurance to our clients is that we have the same commitment to excellence as they do and the resources to back it up.”

Grand Re’s success and growth has taken it way beyond its Zimbabwe origins, Katoma goes on to tell us, to establish a footprint well on its way to covering the entire African continent. “Our original expansion into the rest of Africa was in the form of our Botswana office, for which we received our full license in 2020 and which is now fully operational and growing at a tremendous pace,” he proudly relays.

“Following this original expansion, more recently we opened a fully-fledged office in Tanzania, in September 2021, and then at the beginning of March this year the company started operations in Douala, Cameroon, which will focus on all of our Francophone business.” The official confirmation came in In February that Tanzania had been granted a newly registered reinsurance firm, making Grand Re only the country’s second local reinsurance company joining Tanzania Reinsurance Company (TanRe). With these initial forays outside of Zimbabwe successfully completed, Katoma is keen to convey that Grand Re now intends to take its portfolio across the whole continent, which brings significant mutual benefits.

“This is a very deliberate plan of ours,” he makes clear. “Given the ever-changing nature of the insurance landscape in Africa we see dynamic, new and complex challenges and risks emerging every day. The intention therefore is to avoid concentrating our business in any one location to ensure that if anything were to happen in one territory, the relevant section of the business would be secure and stable enough to offer the required assistance to the affected area.

“Overall, from a strategic point of view the company has moved from being a locally-operating outfit focusing on Zimbabwe to become the original Pan-African player,” Katoma condenses. “We have broadened our ambitions now to establish ourselves firmly on the African continent, targeting in particular the Southern East African side and working our way into the rest of Africa.”

VISIONS OF AFRICAN LEADERSHIP

Grand Re’s steady march across Africa brings wholesale benefits to the market and its customers, while the increase in the number of reinsurance firms is a vital step in ensuring the risks are retained locally, Katoma adds. “A presence in more and more territories allows us to ensure that we are able to give access to good quality insurance products to more and more key clients across the African region,” he delineates. “Currently, there are a lot of classes of more specialist insurance where people are failing to find cover, and Grand Re intends to create tailor-made products for each region to ensure that our clients are able to secure the capacity that is much needed in these areas.”

“On a much wider scale, this will in turn assist the African continent in keeping hold of premiums that historically have always been placed into offshore markets, such as those in Europe and Asia. It is strategically beneficial to the company, of course, but also to these African countries if we are able to increase underwriting capacity locally, and thus assist the country to retain this much-needed forex that would otherwise be placed elsewhere.”

Capital raising and regulatory compliance, along with recruitment and training of the staff charged with manning all of these new offices, is consuming a sizeable amount of Grand Re’s current drive and resources, according to Katoma; it is having a tremendous knock-on effect for skills development in this important African sector he explains. “In terms of human capital, the sheer growth of the business has also highlighted something of a scarcity of skills on the continent. We are really on a drive to grow our talent and develop these specialised, actuarial and legal competences within our own respective offices.”

Amid the most stringent of operational challenges and volatile prevailing market conditions, Grand Re has withstood it all to be positioned more strongly than ever and with a clear path to further dominance, Katoma wraps up. “We are now fully focussed on our value proposition, really getting to the bottom of why it is we are here and differentiating ourselves from the competition via our offering to our clients and remaining relevant,” he states.

“Throughout the pandemic and a litany of economic challenges we have recorded more than double-digit growth year in, year out, quite contrary to what we see happening around us,” Katoma explains, “and the robustness of our business model allows us to respond to the needs of our clients and attract every possible dollar to position us to fulfil our strategic objectives. We now want to achieve a balance sheet that allows us to compete with the top tier players on the African continent, and to attain a competitive rating to put us among its leaders. This is what Grand Re is pursuing: to be number one in the market in Africa and the go-to brand across every market that we serve.

“We look forward now to growing together with all of the new clientele that comes along with all these new strategic developments, and building ourselves up to be the reinsurer of choice across sub-Saharan Africa. Our personal performance far exceeds the global reinsurance industry, and at Grand Re we are refocusing, reinforcing and revolving the risk transfer mechanisms to ensure that, time and again, we are the perfect reinsurance partner.”