Leapfrog Investments — a pan-African investment firm — is close to acquiring a majority stake in UT Life Insurance Company Limited as it looks to further deepen its access to high growth markets in Africa, reports indicate.
The deal’s completion, which is expected to be announced on Wednesday this week at the latest, is understood to be one of the biggest made by Leapfrog in the country.
Officials of both UT Life and Leapfrog Investment are tight-lipped about details of the transaction since negotiations are still ongoing, but sources indicate that the Ghanaian owners of UT Life — UT Holdings Group — will cede about 80 percent of its stake in the insurance company to Leapfrog.
UT Life will thus be the second insurance company in Ghana to be taken over by Leapfrog Investment in less than four years, and follows last week’s announcement that Leapfrog and Prudential Financial Inc. have secured US$350million to invest in the life insurance companies of leading economies on the continent — including Ghana, Kenya, and Nigeria over a three-to-five-year period.
Ahead of the announcement of the acquisition, Leapfrog has already moved to appoint Kweku Yeboah-Asuamah, formerly of Enterprise Life and Enterprise Trustees as the chief executive officer of UT Life.
Currently, UT Life is controlled by UT Holdings which owns 92.87 percent stake in the business, with 3.31 percent held by NSIA Ghana Insurance Company while CDH Financial Holding holds 2.73 percent and 1.09 percent is held by other individuals.
It is anticipated that the eventual acquisition of UT Life will bring significant capital investments into the company’s operations in the face of the regulator’s requirement for all insurance companies to have by now recapitalised to the tune of GH¢15million — a figure that has been told forced many insurance companies to consider mergers and acquisition deals.
UT Life entered the insurance market in 2011, following the acquisition of Golden Life Assurance Company by UT Holdings Group as part of efforts to widen the Group’s footprints cross the country’s financial services sector.
Though UT Life has struggled to gain a firm hold on the life insurance sector, the company’s growth potential has been acknowledged across the industry as it has introduced a number of innovative products onto the market.
UT Life in 2015 recorded gross premium income of about GH¢19million and plans to exceed that this year.
For Leapfrog investors, the acquisition of UT Life is a further statement of intent to buy into emerging market businesses with potential for high resale value.
According to managers of Leapfrog Investment, Ghana is one of the fastest growing economies globally, with the life insurance sector alone growing more than 40 percent per annum.
And with less than two percent of the country’s estimated 27 million people having access to insurance, the industry offers a compelling opportunity for quality, relevant and affordable products to fill this gap.
Leapfrog thus values the Ghana insurance industry highly after earlier acquiring Express Life Insurance Company, which in 2012 was the largest private foreign investment in Ghana’s insurance industry.
By investing in Express Life, Leapfrog helped to increase Express clients from 12,000 to 423,000 within two years, reaching almost 900,000 people — family-members included.
The transformed company attracted the attention of Prudential PLC, which was looking to establish a footprint in Africa.
By March 2014, Express — now a healthy and growing company — had been acquired by Prudential PLC and rebranded into Prudential Life Ghana.