Trustco keen to lay the BRICS
Trustco Holdings Limited is keen to lay the BRICS in the long run while it carefully tinkers with its Trustco business model work in South Africa, the testing ground for its recently re-modelled insurance model.
Speaking to the Economist this week, Trustco Group Head of Communications, Bob Kandetu revealed the revised model. He said, “We have implemented a three tier strategy that combines organic growth, downsizing the legacy business and we are on the look-out for an acquisition that will augment the Trustco Mobile model. We are cognisant of the negative market sentiments in certain quarters about South Africa. However, we maintain that South Africa is an important market for our growth prospects outside of Namibia and in the future.” Should Trustco succeed in South Africa, it will change its focus to the BRICS countries as well as the rest of Africa. Said Kandetu, “We feel that if we can make the Trustco business model work in South Africa, we should be able to make it work anywhere in the BRICS group of countries.” Kandetu was however quick to point out, “While BRICS and the rest of Africa remain on our radar screens, there are significantly low “hanging fruit” here [Namibia] that require our immediate attention.
The recent launch of Trustco’s American Depository Programme (ADR) through BNY Mellon which seeks to raise funds for its expansionary policy. Commenting on the commencement of the programme in October, Trustco Financial Director Ryan McDougall said, “Our recent bank acquisition and inherent strength as an insurer continue to foster a positive image as a financial leader in Namibia. The ADR will be an exciting new venue for international investors as we continue to pursue expansion into other emerging markets.”
The total value of premiums collected in South Africa amounted to approximately N$110 billion for 2013, enough motivation for Trustco to enter that space. Just how much of the market Trustco will capture remains to be seen.
With one eye on Africa, Trustco is in a prisoner’s eye dilemma and will keenly pay attention to moves made by insurance giant Old Mutual which has a well developed distribution strategy with banking and mobile institutions in Kenya and Zimbabwe. More worryingly is the fact that Old Mutual has funds in excess of N$5 billion geared towards growing its investment business in Africa while Sanlam will avail N$3 billion into its expansionary programme.
Motivating the rationale, Kandetu added, “The target market in the micro-insurance space have huge upside potential. The low cost distribution model of the Trustco mobile insurance model augments the growth prospects.”