Written by Carolyn Cohn and Helen Nyambura-Mwaura | From Reuters

A growing middle class in sub-Saharan Africa is enticing European and South African insurers to buy local firms focusing mainly on life insurance and pensions, in the face of mature markets and strong competition at home.

Rapid economic growth in countries such as Ghana, Kenya and Nigeria has increased the number of people with money to spend on insurance to protect their wealth, while regulatory changes are encouraging the growth of domestic savings and pensions.

Several major companies, including Swiss Re, Prudential and Sanlam, are buying insurers in Africa, with the focus on life and pensions products in the more economically advanced sub-Saharan countries.

Notwithstanding the challenges, the race is definitely on. David Hodnett, Barclays Africa’s deputy CEO, told a banking conference in Johannesburg in November: “Every insurer that you look at has probably about five or six suitors.”

A Standard Bank report published in August said while the size of the “middle class” in sub-Saharan Africa may have been overstated in some studies, growth rates were nevertheless dramatic.

Its study of 11 sub-Saharan economies concluded the “middle class” had risen from 4.6 million to 15 million since 2000 and would be over 40 million by 2030, with Africa’s biggest economy Nigeria leading the way.

Insurance penetration, or premiums written as a percentage of gross domestic product, was 11.5 percent in Britain in 2013 but just 0.6 percent in Nigeria. For life insurance, penetration was 8.8 percent versus 0.2 percent, according to Swiss Re data.

Life insurance premium volume in dollar terms rose 18.6 percent last year in Kenya, 13.8 in Angola and 13.5 in Nigeria, compared with a 3.9 percent rise in Britain, the data showed.

Read more at Reuters