A foot in two continents–Giles Ward, ACE

Can you tell us a little of your background and involvement in Africa? I actually joined ACE in 2006 to lead our business in the Middle East and North Africa (MENA) and spent four years in that role before moving to Australia and New Zealand as country president. When I was in MENA, I had the chance to travel extensively in north Africa. I have to say that it is certainly good to be involved in the region again—especially at this time of renewed promise, rapid change and growth for Africa. Since I was last engaged in the region, ACE has opened in Tunisia. Few insurers would probably have considered expanding in north Africa in 2013, but this is a demonstration of the fact that ACE is not afraid to go wherever we see real business opportunity. As I work to bring north and Sub Saharan Africa together as part of one new business region at ACE, I fully intend we will take the same approach to the continent as a whole—and eventually, in a measured way, I expect us to build further on our regional footprint. At the IISA conference you mentioned the links between Asia and Africa—how will your Asian experiences help you in Africa? Many suggest Africa is becoming the ‘new Asia’. There are obviously some logical comparisons to be made between the two regions. Still, comparisons quite often tend to be overly simplistic. There are at least as many different ‘Africas’—54 to be exact—as there are different ‘Asias’.hideHowever, living and working in five different Asian countries, all at different stages of economic development, will hopefully provide a very useful experience for me personally as we develop our vision for Africa. I certainly have learnt about the different ways of approaching new markets and how to bring a new insurance product to those markets in a way that works best locally. It is not a case of taking a cookie-cutter approach for us at ACE. On the contrary, one size definitely does not fit all when it comes to regions as diverse culturally, economically and socially as Asia or Africa. As a global insurer, we have different strengths in different markets; for example, we are particularly strong in consumer lines in South Korea while our Australian business is more P&C-led. So I want us to apply the right skills and expertise to the right markets in Africa, in the same way. We will certainly not rush things. Instead, we will take our time to come up with a considered strategy that takes into account the continent’s diversity and needs, and how we can best serve these. How important are the links between Africa and Asia? The change in global trade patterns is fascinating to watch. The share of South-South trade, measured as a total of global exports, has doubled in the past 20 years, to more than 25%. The links between Africa and Asia amplify this trend, with trade and investment growing especially rapidly between these two continents. Asia is now the third biggest destination for Sub Saharan Africa’s non-oil exports, after Sub Saharan Africa itself and Europe. At the same time, China’s trade volume with Africa is rapidly approaching that of its total trade with the European Union and India has said it wants its bilateral trade with Africa to reach US$100bn by 2015. The change in trade patterns presents both an opportunity and a challenge for the insurance industry. Now, more than ever before, insurers need to simultaneously offer global expertise and local presence to cover the increasingly complex needs of their clients in Africa and all over the world. ACE stands ready and able to meet this challenge. And how does that vary around the continent? I asked delegates that had the patience to listen to my speech at the Insurance Conference of Southern Africa recently what they thought were the industries in Africa attracting the greatest share of foreign investment. I admit it was intended to be something of a trick question and indeed the majority of attendees named mining and energy, whereas today those two sectors represent just a small proportion. In fact the correct answer is technology, media and telecoms at 20%, closely followed by retail and consumer products at 17%. The point I was making is that Africa’s rapidly expanding links with Asia are no longer just about exports of raw materials to resource-hungry markets. Those links today involve investment in sectors, like technology, that could allow Africa to leapfrog its peers. The numbers are telling: India has already made investments worth US$50bn in Africa in areas like telecoms, tourism and construction. Malaysia has invested more than US$19bn—or a quarter of its total foreign direct investment in 2012—in the same areas. Obviously there are local variations, but this is a general trend and I am confident that, over time, it can benefit the entire continent. What do you see as the most exciting African markets? It find it increasingly difficult to pick just one or two to be honest. The pace of new opportunities emerging across the continent is nothing short of extraordinary. Take, for example, banking and financial infrastructure: today it is almost completely unrecognisable compared to how it looked just five years ago. The opportunities are emerging—and indeed changing—very rapidly. I would say though that I find it encouraging that these opportunities are not simply confined to South Africa, which is still in many ways the continent’s most advanced insurance market. They are emerging all over. That is why, as I lead the development of our regional strategy, Sub Saharan Africa will be high on our agenda. And of course north Africa plays, and will continue to play, an important and integral part of our vision for the region—which is why it is home to our latest office opening—Tunis, in 2013. What do you consider to be the biggest challenges facing African markets? During the conference at Sun City, I also asked delegates to share what they view as the biggest challenge of doing business in Africa. The answers were fairly well spread and chimed with my own thinking. Risk management still has a long way to go in Africa. We are seeing signs of progress and greater risk awareness across the continent but there is obviously room for improvement. Underwriting discipline, too, can be difficult to achieve in Africa, not least given increasing international capacity and a lack of risk information in some cases, and this was recognised in the room. However, the majority of attendees named regulation as the biggest challenge. I can understand why. Insurance regulators across Africa do understand the need for clearer cross-border insurance frameworks. But even though there are signs of progress, the truth is that Africa remains highly fragmented, with regulation at different stages of development. As a result, opportunities for cross-border insurance are not being exploited fully. The insurance market is not yet realising its full potential as an enabler of business and economic growth at a time when Africa is firing on all cylinders. Still, we can take heart that Africa’s challenges are not so very different from those in many markets elsewhere. And, with the region having taken many steps forward already, I am optimistic about the future. Do you see these risks changing in the coming year? Our business planning certainly does not anticipate those challenges going away any time soon. Yet I most certainly do not want to sound pessimistic; signs of progress are there. The seeds of change and of a stronger insurance market infrastructure across Africa have been sown. Undoubtedly, conditions are going to improve, albeit more slowly in some places than others. Are there particular market segments that you see as being of extra interest? Let me start by saying that ACE does not necessarily want to be present in every sector of the market. What we want to do is participate where we can provide added value, by unlocking the specialist expertise we can bring from elsewhere in the world, and deploying it in a way that supports local market needs. When it comes to specific business lines in Africa we definitely see opportunities in construction, marine cargo and energy as infrastructures develop; and in different liability lines as the business environment becomes more sophisticated and more international in nature. At the same time, the growth of the middle class across the continent presents significant room for growth for consumer-related products. What about some of the liability risks, such as cyber? How are those insurance markets developing in Africa? That is a good question. South Africa, the continent’s most developed insurance market, already shows increasing awareness among businesses of the value of specialist liability cover. We receive a growing number of inquiries on environmental liability cover, and also interest in cyber risk solutions. I am confident we can play a role there. Emerging risk solutions are in our DNA and we certainly intend to bring our capabilities to Africa to meet the changing needs of businesses in the region. Watch this space.

A foot in two continents–Giles Ward, ACE

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