News Africa30 Mar 2020

Nigeria:Insurance market sees M&A deals

30 Mar 2020

Private equity firm Verod Capital Management is set to buy all 100% of Law Union & Rock Insurance and recapitalise the insurer.

Mr Ademayowa Adeduro, managing director and CEO of Law Union, said, “The crucial phase of our recapitalisation exercise was crossed on 27 February 2020, with the signing of a Transaction Implementation Agreement between Verod Capital Management and the majority shareholders of Law Union & Rock Insurance.

“We have subsequently informed the National Insurance Commission, the Securities and Exchange Commission and the Nigerian Stock Exchange about this development.”

He explained that the agreement gave legal backing to Verod Capital to buy the 100% stake in Law Union, recapitalise the insurer to a minimum of NGN10bn ($27m) and also delist its shares from the Nigerian Stock Exchange.

Verod Capital is an investment company with substantial interests in Nigeria and West Africa, including in Tangerine Life Insurance, which provides digital financial and insurance solutions in Nigeria.

Meanwhile, Tangerine Life (formerly Metropolitan Life Insurance Nigeria), supported by Verod Capital, announced its acquisition of a majority stake in ARM Life Insurance. The acquisition, effective from 28 February, propels Tangerine Life to fourth place in Nigeria’s life insurance industry.

The value of the Tangerine-ARM deal was not disclosed, reported Ecofin Agency.

“The acquisition will provide a perfect springboard for Tangerine Life to utilise the distinct strengths that ARM Life brings to bear, thereby strengthening the insurance services provided by Tangerine Life to create and deliver better value,” said Livingstone Magorimbo, managing director of Tangerine.

Prior to this transaction, ARM Life Insurance was majority (75.16%) owned by the Nigerian investment company, ARM Traditional Asset Management.

According to ARM, the sale to Tangerine is part of the group's plans to refocus its business and increase investment product offerings.

An ARM statement reads, “The divestment also allows us to collaborate more efficiently with multiple insurance companies on product development.

“We shall continue to maintain our business relationship with Tangerine Life, the new owners of ARM Life. We assure our clients who have insurance products with the organisation, of our continued oversight of their policy where they have asked us to do so.”

Last year, South Africa's Momentum Metropolitan Holdings exited the Nigerian insurance market after selling its 100% stake in Metropolitan Life Nigeria (now, Tangerine Life) to Verod Capital.

These M&A deals are taking place as the insurance regulator has directed insurers to increase their minimum capital by the end of this year.  The minimum capital base for life insurance companies has been raised from NGN2bm to NGN8bn. 

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