South Africa's Liberty Holdingswill acquire a 75 percent stake in a Nigerian long-term insurer for 160 million rand ($12 million), the company said on Friday, after reporting a 38 percent decline in earnings.
Liberty has been expanding beyond its home base to parts of Africa, where a growing middle class is driving demand.
Part of Liberty's strategy is to grow its presence in West Africa through the long-term insurance business and by entering the asset management business.
"We see Nigeria as a market of the future," Liberty Chief Executive Thabo Dloti told Reuters. He declined to give further details about the Nigerian insurer.
"It may be having difficulties now, but everything indicates to us that in the long term, Nigeria is going to be a big contributor of growth if you are doing business in Sub-Saharan Africa."
Further details of the deal were not disclosed.
Liberty, South Africa's fourth biggest insurance firm by market value, already has a presence in Nigeria through Total Health Trust, after buying the remaining shares it didn't already own for 142 million rand in August 2015.
In 2016 it concluded three short-term insurance acquisitions in Uganda, Malawi and Botswana and received its licence in Lesotho to operate a life and health business.
Liberty, majority owned by South African lender Standard Bank, reported a 38 percent fall to 904.5 cents in normalised headline earnings per share, for the year ended December 31 due to increased pressure on consumers and lower returns from investment markets.
Shares were down 1.80 percent to 111.46 rand at 0806 GMT.
Net customer cash inflow, or the difference between money received from customers and money given back, fell 49 percent to 7.7 billion rand.
Earnings in its Africa insurance business were 41 million rand, while earnings from the group's South African retail operations were down 40.1 percent, the firm said.
Liberty declared a gross final dividend of 415 cents per share.
"Operating conditions are expected to remain tough and the pressure on consumer disposable income is likely to continue in the short term," Liberty said in a statement.
© Reuters News
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