Insurance brokerage tailored to the Angolan market

Angola

Tiago Dá Mesquita, managing director of Zillian, talks to The Energy Year about the growth of insurance activity as Angola’s market emerges from the pandemic crisis and the advantages of the creation of Zillian as a local company. Insurance broker Zillian was formed in 2021 via the acquisition of the Angolan subsidiary of global professional services firm Aon, which had been operating in the country since 2004.

How do you assess the ability of Angola’s oil and gas sector to emerge from the crisis?
The outlook is good, specifically for the oil and gas industry, assuming that oil and gas prices stay at the current level. Investments and new developments were postponed all over the world, and this will result in a lack of supply in the market for the next few years, which will likely support higher prices.
We are beginning to see more investment again, and not only directly from operators, but also from service providers. In 2021, we were involved in quite a few offshore construction projects, some of which had been postponed in 2020.
In line with this, some service providers are increasing their headcounts, which had mostly been stabilised over the last few years. We know from our clients that some of them are busy and excited with new tenders for contracts, and that is a good sign for the industry.

How has insurance activity been affected by the recent surge in oil and gas projects in Angola?
The whole country grows in line with the oil and gas industry, and there is a direct link between oil and gas and the growth of the insurance industry.
The hydrocarbons industry is strategic for the country, so the risks involved must be well covered. The local market covers these risks up to its capacity and the remainder is transferred to the international reinsurance markets. Reinsurance is important, but it’s also important that local companies participate as much as they can in these risks to keep part of the premium in-country and to have technical knowledge stay or be created in-country.

What were the long-lasting effects of the Covid-19 pandemic on your oil and gas client portfolio?
In general, we have seen claims go down, especially in 2020 when there were lockdowns. There were fewer accidents and less activity from the companies and in the economy. Overall, there was less risk.
As for risk management services, there was concern from the insurance and reinsurance market about the maintenance of the assets. If activities are stopped, insurers want to ensure that the assets are still maintained and that proper risk management is being adhered to. To a certain degree, that increased the demand for risk management consulting and services.

What was the main business driver behind your decision to acquire Aon’s business in Angola and create Zillian?
Aon made a strategic decision to change their operating model in sub-Saharan Africa because they saw that clients could be better served if more autonomy was given to the local operations, which would in turn grow more and provide a more localised service.
The exclusive correspondent arrangement we have in place now ensures that Aon’s clients in Angola will continue to receive the same quality service through the rebranded entity called Zillian.
The teams serving the clients will basically be the same teams with the same culture and the same access to international markets and specialists. We are still connected to many of Aon’s resources, including the IT platforms we have always used to manage international insurance programmes. With a nimbler operation, we will be able to grow more by being more responsive to local market requirements. In the end, what we will have is the best of both worlds.

What are the main operative advantages of owning the local entity?
By having more independence we can be more agile and respond to customer demands more quickly.
For instance, we are launching a service management system that will better allow us to track our performance in handling client requests. We are also changing our core policy and claims management system to a solution that’s more aligned with our local market’s reality. Clients will notice improvements almost immediately, as they will be able to access policy documentation online through a browser or mobile app.

Will Zillian enjoy the benefits of being a local company under the 2020 local content decree?
This strategic change coincidently came at a good time for us thanks to the local content decree. Its exclusivity list includes insurance brokerage services, meaning that only 100% Angolan-owned entities can provide such services to companies in the oil and gas industry. With this change, we are 100% Angolan-owned, which creates a good opportunity for us and also ensures that our clients in the oil and gas industry are fully compliant when working with us. This is also good news for Aon and Aon’s multinational clients because they will continue to be serviced in Angola by a local entity that is 100% compliant with the local content requirements.

How important is oil and gas within the energy segment of Zillian’s portfolio?
It is relevant for our reinsurance portfolio, as we are involved in quite a few operational and offshore construction policies related to oil and gas. In our retail insurance business, it’s also fairly important. If you look at the value chain of the industry, our clients are involved in virtually all of the steps. We have quite a few service providers as our clients, such as offshore service providers and manpower companies.
Our client portfolio mimics the composition of the Angolan economy, so while we have clients in oil and gas, we also have clients from other industries.

Which are the key variables affecting the performance of the Angolan economy?
The diversification of the Angolan economy is not going as fast as we would hope, but there are good signs. The agriculture sector, for example, grew at a higher rate than the overall GDP in 2021, in a year when we had Covid and a massive drought in the country that affected production and family purchasing power.
I think that the outcome of the monetary and foreign exchange policies has been good. We have reached an equilibrium between supply and demand of foreign currency, but its availability will always depend on the volume and predictability of the country’s exports, and those must be diversified.
With the price of oil currently at USD 70, we have a certain supply of foreign currency in the country. Tomorrow, if the oil price goes down and the economy isn’t as diversified as we want it to be, the supply of foreign currency will be lower, the exchange rate will be higher, and the Kwanza will devalue.
Rome wasn’t built in a day. We are in a much better situation today than we were a few years ago, when we had administratively set exchange rates. And this provides a signal of stability for foreign investors as well as local ones.

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