A team of actuaries and financial consultants is reportedly in the running to take over Bona Life, the troubled life insurer which at one point was the country’s third largest but is now under statutory management.
With a portfolio of P712 million in policies, Bona Life was placed under statutory management in January, after it failed to meet the prudential capital thresholds set by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA).
The life insurer struggled due to a shareholder stalemate over recapitalisation of the business, which saw the firm’s founder, Regina Sikalesele-Vaka, exit early in January. Bona Life’s statutory manager, Paul Masie recently told BusinessWeek evaluation of bids was ongoing and would likely be finalised before year end. This week, Edwin Puso Afitile, one of less than five qualified Batswana actuaries, told BusinessWeek his company, Empirica had put in a bid for Bona Life, backed by a management team with “in excess of 100 years of experience in life insurance”.
“We are actuaries by profession and we have a thorough understanding of the business,” he said.
“It’s like having a medical doctor at a hospital.
“I have also been involved in life insurance turnarounds so we put together a calendar plan with a set of defined management actions at specific times that will move the company forward.
“We have set very aggressive growth targets.”
Afitile added: “Bona Life was built by geniuses. It was Botswana’s first indigenous life insurance company and as a Motswana I feel it is really good intent to step up and put an end and a beginning to the beautiful story.
“I convinced some of the best people I have ever interacted with to join us for a while in setting up the business on a strong footing.”
Afitile, currently based in South Africa, said his partners in the bid include experts based in Botswana, Australia, Johannesburg, and Cape Town “who will upskill other Batswana”.
“They bring a set of operational and data analytics expertise that will help us build the business on a data substrate, towards ‘quality of life’ and celebrating the longevity of our clients.
“One of our partners built the HIV/AIDS model used by life insurance companies in South Africa that is also used in Botswana and other Southern African countries.
“The other team member has extensive experience with Amazon Web Services having used cloud computing with a server based in Texas, United States of America,” he said. Afitile said Empirica had approached “some of the best investors” to support the bid’s financial pledge. “I cannot disclose their identities but all I can say is that they have very strong track records
“They will be coming in to back the management team.”Afitile said should Empirica succeed in its bid, the company would ‘move aggressively’ to re-establish Bona Life with the first six months being ‘operationally intense’ led by an operations committee that will reach out to clients and communities. He said Empirica had submitted a detailed plan to the statutory manager and financiers but could not divulge details without prior permission.
“At the core of our operations will be a very strong corporate social initiative to have an impact on our communities, more so that it will be a Botswana-born company.
“We also have plans to partner with Statistics Botswana on the data analysis front to help us understand our market and to create and price products that are tailor-made for our customers with lasting value for money.
“Under our plans, the business will be one of the few life companies that can quantify value for money and use it as a metric that is monitored consistently.
“Applied data analysis is the triumph of the future of life insurance. The old business models will no longer be applicable in the future,” he said.
Asked how Empirica would avoid the pitfalls Bona Life previously encountered, Afitile said the actuaries had done their due diligence and believed the life insurer’s metrics were sound. “There is a detailed strategy submitted, which is our intellectual property.
“It will be great to see all that in action rather than just a plan.
“Some of the people who are privy to the operational and branding information consider it “very exciting,” he said.
Policyholder protection was amongst the biggest fears at Bona Life’s collapse, with analysts saying it was likely policyholders would have to take a ‘hair cut’ or reduction of their benefits in order for the firm to comply with the prudential capital requirements.
At the time of going into statutory management, Sikalesele-Vaka, who founded Bona Life in 2013, held 25% equity, while the Botswana Public Officers Pension Fund (BPOPF) indirectly held 40% and staff 10%. Capital Management Botswana, an asset manager under liquidation, held a 25% stake which was expected to revert to the pension fund.
BPOPF members accounted for 85% of Bona Life policyholders, but the pension fund was reportedly resolute against recapitalising the business. The pension fund preferred NBFIRA to prescribe the route to be taken to resolving Bona Life’s crisis.