Zenith Bank sells stake in Life Insurance firm to Prudential UK
In a press release to investors and the general public, UK based Prudential Plc has announced the acquisition of a significant stake in Zenith Life insurance, a subsidiary of Zenith bank. Both parties have also begun a bancassurance relationship. Bancassurance is an arrangement whereby an insurance company sells its products through a bank’s branches.
What does Prudential gain ?
The insurance industry in Nigeria is vastly untapped as barely 3% of the country has subscribed to an insurance policy. Expanding to Nigeria is also a step forward in the company’s expansion in Africa as it has offices in Ghana, Kenya, Uganda and Zambia. Buying a stake in an already existing firm is cheaper than starting from scratch. The firm could eventually acquire the company in entirety in the near future.
How does Zenith Bank benefit ?
The bancassurance partnership is an additional source of income from the bank, and exposes it international partnerships. Shareholders also stand to benefit as the bank may decide to pay out earnings from the sale. In a notice sent to the Nigerian Stock Exchange (NSE) earlier today, the bank had hinted of a possible consideration of interim dividend.
Zenith Life Insurance is a subsidiary of Zenith bank which is one of the tier one banks in the country. Prudential is a British based financial services firm that was established in 1848. The company is listed on the London, New York, Hong Kong and Singapore stock exchanges.