HOLLARD MOZAMBIQUE: Hollard Seguros Celebrates 20 Years of Success in Mozambique

Mozambique remains one of southern Africa’s most important economies – a conduit to global markets for its landlocked neighbours. Internally, a population of more than 31 million enjoy arable land, rich mineral resources, and burgeoning natural gas deposits that look set to change the future of this country for the better following an economic slowdown in 2020 as a result of the Covid-19 pandemic and force majeure enforcement due to the terrorism situation in the north of the country.

A strong partner for South Africa in terms of trade and international cooperation, Mozambique shares more than just a land border with its neighbour to the south. Business and investment move frequently across borders as the N4 crosses into Komatipoort from Ressano Garcia.

In 2002, South African insurance group, Hollard, formalised its operations in Mozambique to create Hollard Mozambique, a specialist provider of tailored products for the local market, delivered with the same quality that the brand was know for in South Africa.

Two decades on and Hollard Mozambique has grown become the leading insurance provider in Mozambique with clear message for customers – ‘Whatever your insurance needs, we’ve got the right cover, right here, right now’.

Through the provision of personal lines – including funeral, car, home and more – and business products – including corporate, commercial, travel, and specialist – Hollard Mozambique protects a large number of business and people in the country using insurance solutions developed in Africa, by Africans, for Africans.

20 YEARS

To mark its big milestone, Hollard Mozambique has been busy. The company has hosted events, delivered workshops, offered audiences a classic music concert and an art exposure, as well as bringing fun experiences for children, creating a passion for arts. The Hollard CSI program promotes the music and arts from Kulungwana Association.

Getting to the 20-year mark has been no easy feat in a country that had little understanding or participation in the insurance industry when Hollard arrived and since then continues to educate the population on the significance of insurance in economic development.

“As insurers, we sell trust,” says Founding Partner, Miles Japhet on the company’s origin.

“Mozambique only started its free-market economy 10 years prior to us starting the business. The Mozambican market only had one state run insurance company. From 1993, the state allowed private enterprises to start in the market and by 2001 the market was new. We found a very subdued market and, from an individual and personal lines point of view, the Mozambican public was not really use to seeking insurance,” says CEO Henri Mittermayer on the industry’s nascent days.

Active in South Africa since 1980, the group has a strong history to call on when implementing novel ideas, but learning a culture and environment to build strategies around was a more challenging proposition, remembers Mittermayer.

“A market that only started in the late 90s is effectively only 30 years old and compared to a market like South Africa which has had a free market for over 100 years, we are behind in that element. Fundamentally, in 2001, Hollard Mozambique was really only catering for foreign direct investment coming into the county through the likes of Coca-Cola, some mining companies, and other corporates. The Mozambican insurance buying public had not been developed yet. It was in 2003 that the banks and financial sector started giving out loans to people and facilitating Mozambicans to buy cars, houses, and essentially build up their assets – it was only then that we started seeing an emerging middle class within the country,” he says.

The first policy from Hollard in its new territory was a multi-peril policy and this differentiated from other companies at the time. It allowed clients to pick and choose, customising what they needed for their business but with just one policy to keep things simple.

“We went into products that were very Mozambique-centric,” says Mittermayer, adding that a tremendous amount of education has been required to bring the market to where it is today.

Celebrating the company’s anniversary allowed employees and management (Hollardites) to further embed a commitment to the industry in Mozambique. “When we started 20 years ago, it wasn’t obvious that there was room for another insurer, but we’ve demonstrated that there is a real demand for insurance cover, both from businesses operating in Mozambique and individuals, who remain under-insured by world standards. We’re already looking forward to the next 20 years,” asserts Marketing Manager, Jéssica Figueiredo.

ESSENTIAL EDUCATION

In every developed economy, and strong emerging economies, a relevant and thriving insurance industry must be allowed to succeed to assist with risk transfer as individuals and companies develop. This ideal has become more of a reality in Mozambique, but there remains more to do.

“People look at insurance as a whole,” Mittermayer says, “and don’t appreciate how different the various disciplines are. The Mozambican market is fairly small by world standards, and the sector is populated by generalists who claim to do everything from engineering to assets to life to funeral. What is exciting is that Hollard has led the charge in becoming more specialised in the different disciplines of insurance. We have also recognised the different distribution mechanisms to also answer to the different needs of the different sectors of the market in Mozambique.” 

Today, the company has business units dedicated to different areas of the market, that operate very differently, to ensure product and service quality that is always advancing. By creating a broker intermediated distribution division, the company talks to the commercial businesses in Mozambique. Partnering with the countries seven main banks, Hollard Mozambique has established a bank assurance division which looks after the public in terms of loans, credit, and vehicle leasing. There is also a direct channel, which Mittermayer is proud of, looking after products delivered through partners. “We have partnered with the likes of Pep Stores to introduce a life product and a motor vehicle product. We have partnered with Appload which mediates between owners of heavy commercial vehicles and people that want to move goods across the country, putting these people together, and we handle the insurance. We have also partnered with travel agents to offer international and internal travel insurance,” he comments.

A key market for the company is agriculture. Since the formation of the business 20 years ago, agriculture has always been attractive because of its scale. The industry in Mozambique is a large employer, a creator of economic opportunities, and a backbone of the nation in terms of food production. But, for a long time, many smaller players in agriculture went unprotected – a challenge in a country regularly hit by cyclones and other catastrophic weather events.

“Hollard sees insurance as a part of the financial sector that should be used by the public and the market in general as a risk transfer tool – alongside others – to help create resilience, contain wealth, and consolidate on assets that have been developed and achieved,” explains Mittermayer, saying that the development of Hollard Agri came as direct solution to challenges in this space.

“The small and micro farmers in the country are traditionally not insured and these are subsistence farmers. We have put a lot of effort into turning these subsistence farmers into more that, where they can truly benefit their environment. We have partnered with a seed provider and we have embedded insurance on every pack of seeds. We are using satellite and GIS coordinates to understand where these farmers are. If there is any disaster – drought, flood or cyclone – if the farmer is within agreed parameters, automatically that farmer can make a claim and we will replace the input costs that the farmer has invested on seeds. We are becoming more specific in the different areas of the economy and becoming more of an expert in those areas.”

In January and March 2022, cyclones Ana and Gombe hit the country, wiping out crops and much hard work from small farmers. Hollard paid claims and through its partnership with Phoenix Seeds, replacing seeds in preparation for regrowth.

“We now insure nearly 60,000 small farmers in the centre of Mozambique with seed insurance, and that is a huge development.”

ICE ACQUISITION

In March, the Hollard Group announced that Hollard Moçambique Seguros had reached an agreement to acquire the business of International Commercial and Engineering (ICE) Seguros, boosting the Non-Life business of the company and seeing it become the country’s largest insurer by premium income, with annual turnover exceeding MZN6.2 billion and a combined market share of 24.6% in the first quarter of 2022. Regulatory approvals were completed, and the two companies are now operating as a single entity. Mittermayer was expectedly thrilled, saying: “[It] represents a historical occasion for the insurance industry of Mozambique and we are grateful to the regulatory authorities and all the parties who have made this a reality. We’re especially grateful to the team at ICE, who have been incredibly supportive throughout this process.”

He said that he was excited to work alongside ICE CEO Robert Lewis and industry veteran Kay Wilkinson, as well as the rest of the team, in service of Mozambique.

“Having operated in Mozambique for more than 20 years, we today start a new chapter in serving this important market. We believe this transaction puts Mozambique firmly on the international insurance map and we will be actively looking to grow corporate and multinational business in the country. We are excited to consolidate and extend the international client relationships that ICE was so successful in establishing.

“This transaction represents a huge vote of confidence in the Mozambican insurance market. Approval of the deal is also a vote of confidence in Hollard Seguros and our purpose of enabling people and businesses in Mozambique to secure a better future by optimising opportunities for creating value and wealth. It’s not an endorsement we take lightly, and we remain acutely aware of our obligation to provide world-class service to our customers, brokers and partners.

“With our Life business showing strong growth, and with our group turnover across both Life and Non-Life businesses now close to MZN6.5 billion, we are building a business of real stature and look forward to contributing to the vibrant Mozambican insurance market in our new capacity,” he added.

ICE will add scale to the Hollard business and allow it to operate as the primary insurer with strong efficiencies in a competitive, emerging market.

Typically, through acquisitive activity of this nature, there can be culture clashes and resistance to change as two different philosophies bond together. But these challenges were addressed and headed off early in the process, and Mittermayer says that Hollard identified ICE because of its complementary set up.

“Culture was something that we considered before the deal as it’s important to us – we want to work with people who share our values and outlook and that was part of the due diligence we went through prior to purchase. Potential challenges did exist in terms of client relationships, but thanks to the dedication of the ICE team and the strength of the Hollard brand we’ve been able to retain most of, if not all, of this business.”

He adds that further growth is definitely a priority and, although acquisitions are not easy, many opportunities are being considered.

FUTURE GROWTH

Looking forward to the next 20 years in business, and with the major coup of ICE now complete, attention turns to the future, where Hollard Mozambique believes it has so much to offer. Its energy, oil and gas book is strong, its agricultural innovations are well-documented, and its personal lines continue to gain traction as the economy grows once again.

But it is specialist products where, again, the company is gaining many plaudits. The inventive nature of the company, and the willingness to try new things, is what separates this industry leader from competition.

In April 2022, Hollard Moçambique Seguros penned a partnership agreement with local fintech consultancy, Askari, to launch a digital strategy which will target cross-border trucking fleets. Every foreign vehicle travelling into Mozambique must have third party insurance cover underwritten by a Mozambican insurance company. This new product makes the process fast, easy, and effective, and comes backed by Hollard’s brand of quality.

“Maputo is a massive transit point for South African commodities such as chromium and coal. This transition to a digital distribution system represents a major technological jump forward and could not have come at a better time, especially as we expect to see an increase in border traffic as the world continues to emerge from the Covid-19 pandemic,” says Askari CEO Gary Wild.

“Hollard Mozambique has always been aggressive in staying at the forefront of creative, client-service driven, technical insurance offerings. Having just acquired International Commercial and Engineering Insurance, Hollard is now Mozambique’s largest insurer by a significant margin, so we are delighted to be working together to fulfil an important strategy,” he adds.

The major benefit for clients here is the elimination of wait times, where drives were forced to exchange cash and hard copies of policy documents. Now, everything happens digitally, in real time.

Of course, this product delivers as part of Hollard’s win-win-win philosophy. Mittermayer describes the company’s purpose and how Hollard Mozambique continues to live true to this vital objective.

“Hollard is leading the way in differentiating and creating different baskets for insurance. It is a support solution – a financial solution – for different sectors of the market, and different levels of the market within those industries. The more we become separated and specialised, the more the education factor comes through to the market and people realise the benefit of insurance for them.

“Fundamentally, Hollard Mozambique as part of the Hollard Group, is a purpose driven company. When we talk about the enablement of people and businesses, we talk about securing a better future. If you go about every day with this clear purpose of enabling people and businesses in Mozambique to secure a better future, it is very easy to develop and contribute to the growth of the economy. The results then come naturally as a by-product of us following our purpose.”

He finishes saying that while there are challenges in Mozambique, like the rest of the world, they are outweighed by the opportunities, and while this doesn’t mean things will be easy, there are major openings in the market especially with life and health products, and increasing local risk retention levels.

With a modest economic recovery underway in the country, and the World Bank expecting around 5.5% GDP growth between 2022 and 2024, Hollard Mozambique is set to experience further demand for its expert services. Thankfully, this is a business with an appetite for delivering unique, high-quality products, and this will continue as Mozambique, and the rest of the world, grows once again.

“Going forward, our sense of responsibility as the leader in market will continue to be taken very seriously, we don’t take ourselves too seriously, there has to be humour and smiles, but we take what we do very seriously,” Mittermayer closes.