Funmi Adenmosun Vice Chairman of Investments & Allied Assurance

IAA is becoming a model of growth, with increased sales, a new stock subsidiary and local understanding

Investments & Allied Assurance Plc (IAA) is ready for the next steps on its path to faster growth. The insurance company has finished a process of consolidation and raised almost 11 billion naira ($93.5 million) in a public share sale, leaving it in an excellent position to expand both within Nigeria and into neighboring countries.

IAA, which was previously known as Milverton Insurance, is now prepared to take advantage of the vitality of the Nigerian economy and the growing number of foreign investors coming to the country to boost profit.

“The opportunities here are clear,” says Funmi Adenmosun, IAA's Vice Chairman. “There is an increase in the amount of people entering the country to set up businesses and create investments here, in particular from the East. The development of the economy in Nigeria has been an explosion, and the increase in investors entering is evidence of this.”

IAA's financial results for 2007 show that the company is already improving its performance. Sales increased 69 percent last year to 2.7 billion naira, while profit after tax jumped 63 percent to 917 million naira in the same period.

To build on that success, the company is now investing more in selling personal lines of insurance to Nigerians, who are typically underinsured. IAA intends to sell more to rural markets, and expects to gain as people become more aware of the uses and benefits of insurance.

“We are not at the stage where the individual feels the need to acquire insurance as a matter or course, we must still reach that stage and satisfy the needs of the public and develop products for them,” says Adenmosun. “There is a vast population in Nigeria, which is huge market. The public is slowly beginning to understand the insurance sector.”

Another area where IAA wants to expand its operations is the sale of non-insurance financial services. The goal is to provide a whole series of services and offer a one-stop shop for clients. The company will do this partly with the help of strategic alliances, and it is targeting real estate and investment services for a start. Some of the proceeds from the recent share sale will be used to fund this expansion.

“The development of the economy has been an explosion, with an increase of investors entering Nigeria”

“We have outlined certain key areas where we want to deploy these funds to,” says Segun Akinyemi, IAA’s Managing Director. “We have set up some separate subsidiary companies, for example real estate and asset management, where we will deploy these funds. We also want to develop our branch base very well.”

The success of the sale of 28 billion shares in May through a private placement has been key to the company's plans. On the one hand it provides the funds for expansion, and it also shows that investors approve of the growth plan.

IAA plans to carry out another share sale in the next year to ensure that it has sufficient funding to grow into the new markets it has targeted. The company is confident that it can use the new funding in a way that will benefit clients and investors, Adenmosun says.

“Within the next six to twelve months we plan to do a full IPO, to raise additional funds,” he explains. “We believe we can do more and grow, that is why we are applying for the life insurance license and seeking further partners. We want to ensure we have a superior performance and create additional value added services for our stakeholders.”

One of the ways IAA is focusing on creating added value is through alliances. The insurer wants to enter the life insurance and pension fund management markets, and is currently in discussions with some companies in South Africa that are already active in those areas, Adenmosun says.

IAA is also looking at opening a stock brokerage subsidiary, and will consider other paths to growth as well, such as mergers and acquisitions, he added.

“Yes, this would be considered; it would depend on what is involved,” Adenmosun confirms. “If it meant increasing value for our shareholders, we would certainly be interested.”

IAA is working on increasing value right now through its training programs, and through its investments in superior technology. The goal is to improve customer service and to offer clients new and better products that more closely match their needs.

The new technology is already reaching new clients and spreading knowledge of the company's technology online. The site gives clients direct price quotes, and also helps provide unique solutions to their requirements.

“We have established an exceptionally advanced technology system that we have applied to our company, in order to have an A-class insurance company so that our customers can reach us on the web,” says Akinyemi.

IAA is also preparing to move into other countries with less developed insurance markets, including nearby Ghana. The expansion plan will initially include seeking partners in other African countries, but could eventually grow and lead to the company entering markets outside Africa.

“We look forward to reaching all parts of the world in a few short years,” Adenmosun says. “Although we are taking very small steps in terms of partnering with our immediate environment in Africa, we believe that the world should watch out for IAA.”