San­lam seals Sa­ham deal

• SA in­surance giant fi­nally gets ap­proval from au­thor­i­ties and pays Sa­ham Group $1bn for re­main­ing 53% stake in Moroccan in­surer

Business Day - - FRONT PAGE - Londiwe Buthelezi Fi­nan­cial & Busi­ness Writer buthelezil@busi­nesslive.co.za

Af­ter seven months of wait­ing and much spec­u­la­tion whether the Moroccan au­thor­i­ties would al­low an SA player to take over their largest in­surer, San­lam has con­cluded the ac­qui­si­tion of Sa­ham Fi­nances.

Af­ter seven months of wait­ing and much spec­u­la­tion whether the Moroccan au­thor­i­ties would al­low an SA player to take over their largest in­surer, San­lam has con­cluded the ac­qui­si­tion of Sa­ham Fi­nances.

The SA in­surer an­nounced on Thurs­day that it had ful­filled all con­di­tions needed for the trans­ac­tion to be fi­nalised and the $1bn price tag had been paid to the Moroccan in­surer’s par­ent com­pany, the Sa­ham Group.

“I was al­ways con­fi­dent that it was go­ing to go through,” said San­lam CEO Ian Kirk on Thurs­day. The in­surer al­ready owned 46.6% of Sa­ham Fi­nances but the ac­qui­si­tion of the re­main­ing 53.37% will give San­lam direct pres­ence in 33 coun­tries in Africa. It will give San­lam ac­cess to 65 sub­sidiaries across Africa, a net­work of 700 branches, more than 3,000 em­ploy­ees and $1.2bn in an­nual turnover.

Sa­ham Fi­nances also has a pres­ence in the Mid­dle East. San­lam will hold a 90% stake, with its short-term in­surance arm, San­tam, get­ting the re­main­ing 10%.

Sa­ham Fi­nances has pro­vided San­lam with the op­por­tu­nity to pen­e­trate Fran­co­phone Africa, which Kirk says would not have been easy for an An­glo­phone player. “We are in a unique po­si­tion … they were try­ing to be a pan-African player like we are. They are the largest in Africa out­side of SA for gen­eral in­surance; we are the largest for life in­surance. It’s just a per­fect com­bi­na­tion,” he said.

But War­wick Bam, head of re­search at Av­ior Cap­i­tal Mar­kets, said while San­lam’s foot­print in Africa will be dif­fi­cult to match, it is likely to still face com­pe­ti­tion in the large mar­kets of Nige­ria, Ghana and Kenya.

“The African mar­ket re­mains com­plex with risk pro­files dif­fer­ing sub­stan­tially from coun­try to coun­try. De­spite its Moroccan roots, Sa­ham is not im­mune to po­lit­i­cal risks which, as MTN has ex­pe­ri­enced in Nige­ria, re­main sig­nif­i­cant.”

The two in­sur­ers have worked to­gether since 2016 and have had time to divide their fo­cus ar­eas ac­cord­ing to who has the best ex­per­tise.

San­lam Emerg­ing Mar­kets will run all life in­surance op­er­a­tions in Africa, Sa­ham Fi­nances will take care of gen­eral in­surance and San­tam will be re­spon­si­ble for spe­cial­ist in­surance and rein­sur­ance.

San­lam said it will not be re­brand­ing Sa­ham Fi­nances’ op­er­a­tions as San­lam. In­stead Sa­ham will be branded as a “mem­ber of San­lam Group” un­less Sa­ham Fi­nances’ man­age­ment team de­cides oth­er­wise in the fu­ture.

Even if Sa­ham Fi­nances were re­branded in other mar­kets, Kirk said it would like to re­tain the Sa­ham brand in Morocco. Sa­ham Fi­nances’ man­age­ment team will not change ei­ther and will re­main re­spon­si­ble for all op­er­a­tional and strate­gic de­ci­sions as far as gen­eral in­surance is con­cerned.

“Sa­ham has a very ca­pa­ble team. We’ve been work­ing to­gether for some time. The man­age­ment team ac­tu­ally wanted to join San­lam.”

With a turnover of more than $1.2bn and $77.4m earn­ings in the 2017 fi­nan­cial year, Sa­ham Fi­nances will con­trib­ute just be­low 10% of San­lam’s prof­its, said Kirk.

Sa­ham Fi­nances had $850m in net as­sets at the end of 2017.

SA­HAM HAS A VERY CA­PA­BLE TEAM. WE’VE BEEN WORK­ING TO­GETHER ... THE MAN­AGE­MENT TEAM WANTED TO JOIN SAN­LAM

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