Writer: Emily Jarvis
Project Manager: Callum Philp
Established in 2009, First Reinsurance Botswana (First Re Botswana) is the latest arm of the wider Emeritus International Reinsurance Group (Emeritus Re), created to capitalise on the growing demand for financial service expertise in the country. As first-movers in Botswana, First Re is working hard to strengthen the market’s understanding of reinsurance products and the benefits they bring to insurers.
“The law in Botswana was favourable for reinsurance services, and we were the first reinsurers to take advantage of this regulatory environment, starting with Emeritus Re becoming a registered International Financial Services Centre (IFSC) accredited holding Company,” highlights Leo Huvaya, Group Managing Director of Emeritus Re.
The Group has significant sub-Saharan presence in a selection of rapidly growing financial markets via its operations in Botswana, Mozambique, Malawi, South Africa and Zambia; benefitting from a strong pedigree and successful track record of utilising its expertise to help insurers find capital for risk transfer.
“Quick turnaround time especially on claims settlement is critical in our business. We always want to show our customers that we offer a professional and efficient service, and we are constantly looking for ways to become more relevant and get closer to our clients. Our aim is to give our shareholders a better return on investment and improve our credit ratings. All these components have resulted in local investors who are keen to partner with us. Our major competitive advantage is that we are always first to pay all our obligations on time; an element which all players in the market look for,” he further explains.
This attitude to business, combined with its turnkey reinsurance product offering has resulted in First Re Botswana obtaining a share of the market that continues to rise.
Botswana’s financial sector has remained stable since around 2011, with Standards & Poor (S&P) having given the country an A- sovereign credit rating (as at August 2015). These positive market conditions have allowed the niche reinsurance industry in the country to gain traction and develop significantly over the past five years.
Equipped with reinsurance products covering almost all classes of business in Botswana, First Re guarantees professional indemnity in all that it does.
Huvaya comments: “The country has been praised for its stability and has a good financial market where ease of access to money means on-time payment. By establishing ourselves in Botswana, First Re has been able to take full advantage of the regulatory framework here without unnecessary bureaucratic restrictions on the movement of money.”
All of the above serves to demonstrate that Botswana is a key contender in Africa’s reinsurance landscape, and First Re has identified many classes of business that are growing in popularity. Given that the agricultural industry is a key contributor to Africa’s economy as a whole, First Re is to capitalise on obtaining more business in this area, identifying the need to increase its resources on the ground to take a bigger share of the sector.
Huvaya continues: “Agriculture will remain a crucial growth area from now into the foreseeable future, and due to our involvement in this area we are often asked about possibilities in the mining industry. Both will be important markets going forward that I feel we must invest in to strengthen our business.
“To complete our coverage of all business classes in Botswana we intend to offer life reassurance and we are currently aiming to enter this market by January 2016. This missing piece of the puzzle will allow us to offer composite reinsurance cover - a rising global trend area - which will be a crucial way for us to differentiate ourselves from other reinsurers in Botswana. It will complete our comprehensive service offering.”
Tourism is another key area First Re will look to develop as it presents yet another avenue for growth. Moreover, as more countries open their doors to reinsurance business – such as DRC, Angola and Rwanda – Emeritus plans to leverage its expertise to bring brokering services to these niche and underdeveloped markets.
Technology is a critical tool in any underwriter’s repertoire in order to eliminate as much risk as possible, and First Re Botswana was quick to identify this through the adoption of industry leading software, SICS/nt, which is often heralded as the best software in the industry and subsequently used by many international companies.
“At the moment our systems at each site are separate, but as a Group we want to adopt an integrated cloud solution as part of the next stage of internal improvements. We want to ensure that we are backed by the best the moment someone writes the risk, so we have to depend on both our staff and a reliable set of IT systems,” Huvaya explains.
In order to support the healthy growth of reinsurance products in Botswana, First Re has developed local training schemes that train its clients in the benefits that a reinsurer brings. “We have been recognised for our efforts in not only educating the market, but taking graduates from local universities and putting them through our training programme. These trainees receive comprehensive on-the-job training that is filtered down from Group level, which includes exposure to other markets as well as giving employees the chance for further education through post-graduate diplomas so as to specialise in particular areas of reinsurance,” he says.
Furthermore, international companies with a local presence in Botswana have played a critical role in “the cogs that make the business run”, as Huvaya emphasises: “We always want to make sure that our turnaround time is second to none, therefore we have developed strong relationships with very efficient vendors. AON Re in particular plays an incredibly important role in enabling us to access new reinsurance products and markets.”
He concludes: “Above all, we make sure to pay claims on time – something that any insurer looks for – with the aim of increasing our market share in Botswana and the rest of Africa.
“As more local partners join us, we will increase our market understanding and consequently our product range to include more relevant reinsurance products. Equipped with this bigger balance sheet, we will have a stronger capital base from which to write much more business.”