First Equity / Enterprise Africa August 2021

FIRST EQUITY

FIRST EQUITY

Gearing Up for

Post-Pandemic Take off PRODUCTION: Timothy Reeder

Insurance in South Africa, and the continent as a whole, is one of very few sectors coming through the Covid-19 pandemic in relative good health. For first Equity Insurance Group, spread was no longer a word to dread, as its diversity of portfolio across multiple regions, sectors and sizes of business helped it absorb the shockwaves, refine its practices and continue to grow.

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With many sectors across South Africa retaking their first tentative steps after the disarray wreaked by the Covid-19 pandemic, insurance is one of a lucky few to be poised for growth. A recent report by McKinsey and Company positions Africa as “one of the world’s hot regions for insurance,” second only to Latin America for rate of insurance growth globally and with the potential for prodigious development.

Times of unrest and crisis put insurance at the forefront of a nation’s thinking, and any disruption to consumer and commercial spending caused by the epidemic expected only to delay, rather than alter, Africa’s insurance growth pattern. South Africa, the largest and most established insurance market, holds 70% of premiums on the continent.

Founded in 2006, now with 16 offices in nine countries around Southern Africa and the Indian Ocean islands, first Equity is no stranger to disruption, established to shake up what it called a jaded sector, lacking innovation and

professionalism and highly concentrated on a handful of a multi-nationals. “first Equity was founded with the express intention of creating a credible South African alternative to the few major players in the corporate and commercial short-term industry at the time,” the company details, “and challenges the status quo of insurance broking in South Africa.”

ROBUST RESPONSE This novel approach and abundance of experience has earned first Equity a reputation for top-quality, individually tailored customer service and is one in its three-pronged approach to sustained growth and success. To be able to continue to deliver it seamlessly, without interruption, has been as crucial as it has been impressive to witness.

“There are likely a number of elements behind our ability to adapt in the wake of the reverberations of the pandemic,” Chief Operating Officer Kevin Watson details when pressed on first Equity’s apparently effortless negotiating of the hurdles put in its

path. “One important aspect is that the very nature of our business itself happened to lend itself well to a smooth transition to working from home, which we were already very well set up to do.

“Like most, this meant a slight change in culture for us especially in terms of our people management, but it actually worked very well and in fact we found that people were engaging in dialogue more even than when based fully in the office.

“This is one way in which we have really benefited from such a brutal shock to the system, as we are finding that staff are much more motivated and happy as a result of being able to spend more time at home and gain greater flexibility. We have noticed a profound uplift in wellbeing, with positivity much higher overall.”

With staff wellbeing assured and a swift shift to a new way of working accomplished, it was first Equity’s diversity of operations which then helped it navigate the tumult of this epoch. “On the client side, we represent a number of different sectors and countries within our group,” Watson

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INDUSTRY FOCUS: INSURANCE

explains. “In most cases there has been a fairly negligible impact, really, and most people have kept their existing insurance going even if they might have delayed any new purchases.

“Even in the SME space our client base has also been amazingly resilient, where so many smaller businesses have struggled over the last year and ultimately closed.”

Watson describes how crucial this massively diversified spread of clients and services has been in keeping the group growing. “We have real mix of every sort of insurance in the group,” he reveals. “Having a diversified portfolio of industries and clients of different sizes, looking after both businesses and individuals, has helped stabilise the downturn of certain industries and means that we can manage the ups and downs to come out healthy in the end.”

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// WE WANT TO BE THE BIGGEST HOMEGROWN INSURANCE BROKING GROUP IN AFRICA // TOURISM’S TRAVAILS This is especially true considering that 30% of first Equity’s business comes from tourism, whose operations and profitability would be near the top of a table of those hit hardest by the pandemic’s consequences.

“A large proportion of our companies fall within the tourism insurance value chain, either providing products or acting as specialist brokers,” Watson says. “Clearly the covers in place did not factor in an epidemic like this, and things like the business interruption claims which have arisen have been particularly tricky. To get them paid, our broking and claims teams have

been the conduit between insurers and clients which have included, as an industry, ongoing legal battles and lengthy clarification and negotiation which, while necessary, has been very time-consuming.”

Tourism is some way off full recovery yet, of course, and for some the consequences may well prove unassailable, Watson details. “In our tourism space, I would say that around 15% of our clients have simply closed their doors. Whether they will return when tourism is back to full strength remains to be seen. Even those that have stayed in business have reduced their premiums to the bare minimum.

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“The tourism business has been hit hard and hasn’t recovered as quickly as we would have expected, but we know that this will turn,” Watson reasons.

“There is still a lot of uncertainty out there, but we are very confident that 2022 will see an upswing.

“We have reorganised ourselves and looked closely again at our cost base and efficiencies. We hear daily about the amount of pent-up demand for travel around the world. This boosts our confidence in a strong return for the sector and our clients, which should lead to insurance premiums normalising.”

The oldest of all the businesses in first Equity’s group is SATIB Insurance Brokers, on board for more than 30 years and itself an industry leader in all aspects of insurance for the tourism, leisure and hospitality sectors across Africa. “SATIB took another hard hit,” Watson admits, “but we have again been able to use this opportunity to restructure and look at the business introspectively, so that when the revenue returns we will be in even better shape to provide bespoke products and services to the industry.”

STRATEGIC ACQUISITIONS “We have remained resilient throughout,” Watson sums up, “and have looked at our business model and made big changes. We have focussed a lot more on digitising and making the experience for our clients that bit better, and our staff are probably happier now than ever before.”

First Equity’s aim has never changed, Watson explains: “We want to be the biggest homegrown insurance broking group in Africa. A lot of our big competitors are overseas-based, but we want to be the African leader. There is massive opportunity for GDP growth on the African continent.” To achieve this, the group’s central tenets of quality service through innovation and digitisation are bolstered by a powerful acquisition strategy.

“We are also constantly on the

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lookout for opportunities to merge, acquire or work with the right partners, as the third of our key growth strategies,” Watson details. “This works alongside our drive to fashion bespoke products which respond to the risks of certain key niches, in a way that is different to the commoditised offerings already out there.”

These acquisitions have even been made to happen as first Equity has shored up its current business, Watson tells us. “We have just acquired Sencerus Insurance Brokers, and another called Axcion Administrators, building on further smaller deals last year. We are talking to a number of others while continuing our investment in new platforms and technologies to streamline brokers’ workloads. Watch this space over the next six months as we conclude the acquisition of and

launch a digital platform which we believe is a world first.

“There is a huge amount going on for us, despite the world’s troubles at the moment,” Watson concludes, with first Equity having taken every opportunity to reshape and rethink, ready for a resumption of a normalised world.

“There is a real sense that we are all in this together and we are going to pull through, and we are in perfect shape to take advantage of the inevitable uptick. Now that we have hopefully seen the bottom, we personally are only going to pick up and move forward from here as the world begins to get moving once again.”

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