For a start, building a business in Ghana does not take just passion to succeed; it requires an extraordinary acumen and a deep-spirited commitment to the duty call. It will certainly pass as a formidable record for the Ghanaian company, Express Life, to be spotted by a global giant, Prudential Plc, as having the mark apt for its partnership.
Believe it or not, it is the case that on April 24, 2014, Prudential Plc, a life insurance company with over 165 years experience, started formal operations in Ghana after it successfully acquired Express Life, a local company that had for years used innovative models to reach out to a wide segment of Ghanaian households with life assurance policies.
Its entry signaled an era of greater competition, a vote of confidence in the Ghanaian economy and a contribution to raising the bar in insurance practice in the country.
The search party of the London, Hong Kong and Singapore stock exchanges listed Prudential Plc-found Express Life and it, thereafter, took just a few initial phone calls to firm up a decision for a relationship that was already beaming at amazing prospects of life insurance in the Ghanaian market.
“Ghana has a tremendous long-term opportunity to build its life insurance market. The economy is growing, the population is young and life insurance penetration is low,” the Director of Strategy and Corporate Development, Dr Matt Lilley, told the Daily Graphic just before the launch of the new business, Prudential Ghana, in Accra.
Ghana is currently at a period that population experts believe it can reap its “demographic dividends”, as it boasts a population profile which has more youth and active workers than the aged and dependent persons.
Demographic dividend
Ghana has maintained a youthful population for several decades. Until recently in 2010, the proportion of the population below 15 years of age was more than 40 per cent.
Current changes in the population structure have shifted the working age population group (15-59 years) to 55 per cent in 2010, down from the 50 per cent it used to be since the 1960s, according to the 2010 Population and Housing Census.
Concomitantly, fertility has been declining from more than six children per woman in 1971 to four children in 2008.
According to the National Development Planning Commission, these and other demographic indicators suggest that the proportion of the population in the working ages will increase in the coming years.
Dr Lilley said Prudential was poised to create jobs in the country as it grew the business, as well as partner customers to make investments that would benefit them and the larger economy.
“We have ambitious plans for our business here that will also benefit the Ghanaian society. We will provide long-term savings and protection for our customers and any money we collect from our customers will be invested here onshore, providing long-term finance for the sustainable development of the Ghanaian economy,” Dr Lilley stated.
Insurance penetration
Insurance penetration or the contribution of total insurance premiums to the total value of goods and services produced in the country at a given time (GDP) is only 1.89 per cent in real terms, as against 14.8 per cent in South Africa; 7.3 per cent in Namibia; 2.8 per cent in Kenya and 4.8 per cent in Malaysia, according to Swiss Re’s 2010 estimates.
The performance of life insurance in the country is a far cry from the global picture. The global insurance market is forecasted to have a value of $4.61 trillion in 2012, an increase of 24.9 per cent since 2007.
Life insurance dominates the global insurance market, accounting for 59.7 per cent of the market’s value.
Why celebrate
Curiously, Ghana’s insurance industry has, thus far, benefited most from South-South investments, mainly from South African firms. The entry of Prudential, therefore, marks the second such investment from Europe.
Deep pockets and rich experience
Prudential Plc, the parent company of Prudential Ghana, is one of the world’s oldest, having been founded in 1848 in London, and the most strongly capitalised life insurance companies in the world.
The company has more than 24 million insurance customers in the United Kingdom, where it is a household name, Asia and United States. It has in excess of $745 billion assets under management.
Prudential Ghana will use the symbol of prudence, which has been the public face of Prudential since the company was.
The parent company will, therefore, be in the position to guide the local business in product design and distribution, investing in back-office platforms and improving the general expertise of the local staff whose rich knowledge of the local market Prudential says it will significantly rely on.
Rebranding
Dr Lilley said the rebrand to Prudential Ghana was a demonstration of the company’s commitment to the local insurance industry and customers.
It brings in its wake a new dawn for a local company’s policies to be backed by a parent company with a AA credit rating.
Prudential has already signaled how aggressively it wants its Ghanaian business to run, as it has already shored up its capital by an additional $5 million, double the minimum amount.
Corporate citizenship
The director of Strategy and Corporate Development announced some important contributions the company would be making in communities, giving golden opportunities to underprivileged pupils, while encouraging excellence at the tertiary level.
At the inauguration of the new entity in Accra, the Chief Executive Officer of Prudential Ghana, Mr Emmanuel Mokobi Aryee, announced the initiatives as the Prudential Ghana Scholarships and the Prudential Award for Excellence in Actuarial Science in Ghana.
Prudential Ghana Scholarships
This scholarship, to be managed by Plan Ghana, a non-governmental organisation (NGO), would award complete tuition fees and other fees to 500 gifted and underprivileged senior high school students in Koforidua, Accra, Tema, Kumasi, Sunyani and Takoradi to complete their education. At least, 60 per cent of the scholarship recipients would be girls.
In addition, Prudential Ghana staff would mentor the students to facilitate their academic achievements. The pilot phase of the scholarship scheme would last five years.
Mr Aryee was excited about the scholarship for the pupils because he was a living testimony, having benefitted from a similar scholarship which helped him to obtain quality education which had raised him higher to the position of managing a local subsidiary of an internationally recognised insurance company.
Prudential Award for Excellence in Actuarial Science in Ghana
The purpose of the scholarship is to encourage the training of more actuarial scientists to deepen insurance practice in the country.
To be known as the Prudential Actuarial Support System (PASS), the award would go to support high-achieving graduates in the discipline from the Kwame Nkrumah University of Science and Technology and the University of Cape Coast.
“Prudential Ghana will award 10 recipients the cedi equivalent of $500, offer them a two-day training course to be conducted by experienced Prudential actuaries, and also reimburse exam and study fees for students that wish to pursue a professional course after their undergraduate studies,” Mr Aryee explained.
In addition, the best student would receive a one-year internship offer with Prudential Ghana.
British High Commission
The British High Commission, which hosted the company’s inauguration, said the entry of the company demonstrated the long-term confidence that it had in the Ghanaian economy.
The Deputy High Commissioner of the British Embassy, Ms Caron Rohsler, was positive that the company, which had been expanding over the past 25 years, would create jobs for thousands of people as the business developed.