The bancassurance group of the Franco-Senegalese veteran has continued to grow, benefiting from the consolidation of the sector. Where will it stop?

Sunu is in the process of acquiring a seventh African subsidiary of Germany's Allianz, two years after completing the acquisition of six of them. The pan-African insurer, founded and controlled from Paris by the emblematic Pathé Dione, acquired in early 2019 the stakes of Allianz Africa in six subsidiaries in Benin, Burkina Faso (life and non-life), Mali, Togo and merged the activities of Sunu Assurances IARD Centrafrique with the local subsidiary of Allianz.

At the beginning of January, as revealed by Jeune Afrique Business+, it is on Allianz Congo-Brazaville that Sunu sets its sights. Even if the final agreement is not concluded, the local authorities have not, for the moment, validated the transaction, the negotiations are indeed over. The holding company of the Sunu Participations group companies has already obtained the approval of Cima, the regional regulator.

Pathé Dione (Senegal), insurer. Founder of Sunu, the first life insurance group in West Africa, this son of a Senegalese soldier has been running, since the France, a holding company of fifteen companies. Here, on June 17, 2008, in Saint-Maur-des-Fossés, France. © Vincent Fournier/JA

Insurance then banking

For professionals in the sector, this raid on Allianz's subsidiaries is all the more coherent as it allows Pathé Dione's group to expand its regional footprint south of the Sahara in a few strokes.

According to them, this offensive obeys three principles: Sunu's stated desire to expand its scope; Allianz's exit strategy for certain subsidiaries that consume too much equity; and the new Cima regulation which aims to strengthen and consolidate the insurance sector.

But the ambitious Pathé Dione does not stop there. Insatiable, the pan-African group present in fifteen sub-Saharan African countries and whose consolidated balance sheet total reached 486 billion CFA francs in 2019 (741 million euros), has also proved to be offensive in the banking sector.

After the takeover of Banque populaire de l'épargne et du crédit (BPEC) of Togo in mid-2018, "rebranded" Sunu Bank Togo the following year, Sunu is trying to acquire with the investor capital AfricInvest, BNP Burkina Faso. A time considered favorite, and already present at the round table of the Ivorian subsidiary Bicici, the insurer finally throws in the towel, at the end of 2019, in the face of an operation deemed too expensive.

A year later, it was the Vista Bank group of the discreet Simon Tiemtoré that acquired the majority of control of BNP's Burkinabe subsidiary, as well as Bicigui (BNP in Guinea).

Acquisitive spiral

The disappointment is not however experienced as a failure by the Franco-Senegalese insurer who will celebrate its 80th anniversary this year.

On the contrary, Sunu is rebounding in Central Africa. In DR Congo first, where the group obtains approval in March 2020 to plant the flag of Sunu Property and Casualty Insurance – five years after the liberalization of the sector in the country.

In parallel, it is increasing the capital of all subsidiaries from 1 to 3 billion CFA francs, in application of the new Cima regulations . Then, set sail for the Congo.

An acquisitive spiral that is reminiscent of the way the group was founded twenty-three years ago, with the meeting between the mathematician Pathé Dione and Claude Bébéar, the founder of Axa, thanks to the acquisition by the French group of the Union des assurances de Paris (UAP) of which it is then Director Africa.

It was at this time that the pan-African Sunu was born with, under his arm, the African subsidiaries of the former UAP. Six years later, in 2004, as the Sunu group took shape, he took over Axa's three Vie subsidiaries in Côte d'Ivoire, Cameroon and Gabon.

After this first phase of external growth, Pathé Dione is restructuring his group: the holding company Sunu Finances, which owns Sunu Participations, is responsible for the management of the companies, while its subsidiary Sunu Services brings together the group's central management in Abidjan.

Sunu's vision is clearly driven by its founder

In 2011, Pathé Dione took steps to ensure the sustainability of his "empire" by organizing his management committee. The latter is composed of Mohamed Bah, Deputy Chief Executive Officer of Sunu Participations, in charge of international development and strategy; Joël Amoussou, Deputy CEO in charge of Finance; and, finally, Karim-Franck Dione, son of the founder, director zone outside Cima.

Leader in life insurance

Despite its large geographical footprint, Sunu remains perceived as a "small" player in the pan-African market, despite its consolidated turnover of 298 million euros in 2019, against giants such as South African Sanlam and Old Mutual, or Moroccan insurers (Wafa, RMA...).

Certainly, but in the countries of the CFA zone, on the other hand, its leading role is difficult to dispute.

The group confirms its ambition to become the pan-African player of reference

In Côte d'Ivoire, Sunu is the leading player in life insurance, with more than 30% market share and 51 billion CFA francs in turnover in 2019, far ahead of NSIA Vie (18%), Allianz Vie (16%) and Saham Vie (15%). Côte d'Ivoire (including life and non-life subsidiaries) accounts for more than a third of the group's revenues (37% in 2019). Sunu is also successful in life insurance in Burkina Faso (3rd player, 15% of the market in 2017), Benin, Cameroon and Senegal (3rd player, 28% share in 2017).

As a reminder, almost all of the Sunu Group's workforce, with more than 4,000 employees, exclusive employees and salespeople, is African.

"Sunu's vision is clearly still driven by its founder," comments Ridha Meftah, partner at EY Tunisia, head of the Financial Services Consulting and Francophone Africa division. "In light of this second wave of acquisitions that began in late 2018-early 2019, the group confirms its ambition to become the leading pan-African player," he continues.

Togo is a real laboratory, all the activity of Sunu is represented there

Internal and external sites

This large geographical footprint is not without creating its share of worries (costs in equity, organization, compliance ...) Especially since Sunu is leading in parallel an internal "revolution", through its major project "Digitass". Launched two years ago, it foresees the "profound transformation" of the group by 2023, including a modernization of customer relations and a focus on operational efficiency, according to Sunu's management.

This program is currently underway on a pilot perimeter of the group with strong ambitions of generalization for 2021 and 2022 to all countries of presence. Togo, the group's real laboratory – all of Sunu's activity is represented there – will make it possible to experiment with synergies within the various entities.

Accelerate its development in high-potential markets outside Côte d'Ivoire

Have subsidiary integrations already borne fruit? In this regard, the group has a strategy based on five points: "Strengthen its leading position in life insurance and increase its market share in non-life", "build an efficient and efficient organization", "diversify its activities by creating a banking division", "accelerate its development in markets with high potential outside Côte d'Ivoire", "focus its business on information and communication technologies", details Pathé Dione in the latest annual report published by the group.

As for the development of its markets, there are many avenues. According to Yoann Lhonneur, Associate Director of Devlhon Consulting, "The growth prospects in some countries give the Sunu Group a certain attractiveness. This is the case of Burkina Faso, for example, a major market, or Togo, with its opportunities in the corporate segment. »

In 2019, the growth of life insurance at Sunu was largely driven by Burkina Faso. In the land of Men of Integrity, revenue was up 137% (representing an increase of approximately €8.5 million), following the absorption of Allianz Assurances Burkina Vie (€7.3 million in revenue in 2019). On a like-for-like basis, the subsidiary's revenue increased by 18% compared to the previous year, partly due to the good performance of the pension division.

What about the first post-acquisition balance sheet?

In the non-life (non-life) segment, the integration of the former Allianz subsidiaries led to an increase of €11 million in Burkina Faso and Benin. Also in this segment, revenues increased by 40% in Togo, for a turnover boosted to €3.5 million in 2019 and by 200% in Mali where turnover climbed to €7.4 million. The merger and absorption of the two groups in the Central African Republic also led to a 102% increase in turnover in the same year.

Sunu has taken over some subsidiaries that can be considered difficult

Despite these advances, some observers remain skeptical about the perenniality of some of the assets sold to Sunu by Allianz. "Our projections have revealed that the increase in regulatory capital combined with local operational investments would make it difficult to maintain viable levels of profitability for Allianz, given the volume of activity of these entities," Delphine Traoré, Director of Operations at Allianz Africa, told Jeune Afrique last November.

"Sunu has taken over some subsidiaries that can be considered difficult. Sunu still needs to organize synergies and harmonize practices between subsidiaries as different as Côte d'Ivoire and Mali," said an expert on the pan-African insurance financial market.

Sunu must therefore find a way to grow its acquisitions in small markets, to reimburse the cost of acquisition. However, the group has also injected considerable amounts into its equity, which increased from nearly €64 million to €83 million between 2018 and 2019.

The impact of Covid-19

There is no doubt that the Covid-19 pandemic has "complicated" the acquisition of the Allianz network by Sunu, while insurers' margins are under pressure due to reduced activity and fluctuating performance on the financial markets.

The effects of the pandemic on Sunu's performance in 2020 will only be known when the annual results are published in the near future. It is unlikely, however, that they will cause the insurer to deviate from the trajectory traced by its founder and CEO, who has endowed his group with a slogan that sounds as much a leitmotif as a warning. "Our job, insurance". Who can top that?