Share analysis: Alliance Assurance – Insurance

Company Overview

Alliance Assurances is a joint-stock company with an initial capital of AD500m (€4.6m). It was created in December 2004 by a group of national investors, and in 2007 it launched “Algeria Touring Assistance” in partnership with the Touring Club of Algeria.

In 2009 Alliance Assurances created a subsidiary, Orafina, which is dedicated to enterprise resource planning (ERP), with an additional focus on IT and digital services. In the same year, the share capital of Alliance Assurances was increased to AD800m (€7.4m), with this subsequently increasing to AD2.21bn (€20.3m) through an initial public offering (IPO) in 2010. During 2010 Orafina first deployed its ERP system known as Iris, and Alliance Assurances committed itself to extending its sales network to some 200 branches.

In 2011 Alliance Assurances’ stock became officially listed on the Algiers Stock Exchange and the IPO was supported for one year by means of a liquidity contract signed between Alliance Assurances and Crédit Populaire d´Algérie. Also during 2011, Alliance Assurances launched its strategic plan entitled New Alliance 2015, and throughout 2012 the country created a number of new internal governance committees to assist with the realisation of the strategic plan.

In terms of activity, group turnover in 2014 was around AD4.43bn (€40.8m), which represents an increase of 6.7% compared to 2013. Over the same period, net income decreased by 3.25% to AD355.37m (€3.3m). Current earnings per share were AD61 (€0.56) in 2014, compared to AD63 (€0.58) in 2013. In terms of dividends the company paid AD35 (€32) per share, which represents a payout ratio of 57.17% and a dividend yield of 5.88%.

Revenues for the first half of 2015 were up 3% to AD3.13bn (€28.8m) compared to AD3.03bn (€27.9m) for the same period of 2014. Net income was AD227m (€2.1m), which represents an increase of 5% compared to the first half of 2014, while return-on-equity was 10.3% in the first six months of 2015 against 9.8% in same period if 2014.

Development Strategy

Alliance Assurances’ strategic development plan, New Alliance 2015, has been in progress since it was first outlined following the company’s IPO. The implementation of this strategic plan was launched following consultations held within the company in June 2011.

New Alliance 2015 aims to promote a customer-centred approach, with the goal of making Alliance Assurance Algeria’s preferred insurer. The company focuses on two main customer segments: individuals and professionals, with the latter category including both liberal professionals, such as lawyers and engineers, and individuals working in small and medium-size enterprises and industrial facilities.

The end goal of New Alliance 2015 is to double turnover by 2017, to AD6.7bn (€61.6m), and triple the size of the company’s sales network. Furthermore, in order to become the preferred Algerian insurer, Alliance Assurance is also making efforts in terms of training and simplification of customer offers, as well as launching major communications and advertising campaigns.

In November 2014, during a workshop held in Algiers, the company outlined the objectives for its development in the medium term, including: the establishment of a strategic plan 2015/17; increasing employee buy-in with the company’s strategic vision; and strengthening cohesion amongst management. The new strategy is based on the development of multiple distribution channels, especially for life products, while the network of brokers will be relaunched under a new framework that will provide updated hiring criteria and provide rewards based on sales performance.