Backing proven teams

The launch of African Rainbow Life (ARL) had all the clichés you might expect from such a business: videos of cattle in rural areas and boisterous Miriam Makeba songs. But this is no sprightly independent built up by entrepreneurs with their own savings. It is controlled by Sanlam, and its second-largest shareholder is billionaire Patrice Motsepe’s African Rainbow Capital. At least there is also a strong component of owner-management, with 23% of the shares held by management, staff and communities.

It is puzzling that Sanlam has set up yet another life office. Some cannibalisation is inevitable. Some of its subsidiaries have a clearly demarcated space such as Centriq Life, which pimps out its licence to third parties.

Brightrock could overlap with the more sophisticated end of the Sanlam life and risk sales spectrum, but it has clearly differentiated, complex methodology which appeals to some independent brokers. Miway Life is a good way to capitalise on happy customers of the core Miway motor insurance brand, so there is an argument for keeping it in the Sanlam stable.

In contrast, African Rainbow will be a familiar name to followers of the mining industry, but this is the first time the brand has been used in the consumer market. ARL isn’t a digitally driven business such as Simply or Different Life. It will predominantly sell face to face with salaried staff through worksite marketing. Jurie Strydom, head of Sanlam Personal Finance, says this differentiates it from Sanlam’s in-house entry-level business, Sanlam Sky, which pays predominantly through commission.

The ARL management team met at Old Mutual where they worked at its Mass & Foundation Cluster (MFC), by far the most powerful life office at the

entry level. It has 4,000 advisers and R3bn in operating profit.

Bongani Madikiza, the former head of the unit, has recruited key former colleagues such as Brian Maluleke as head of distribution, Darryn Padayachee as CFO, Marcelle Arnold as head of marketing and Petunia Nkadimeng as head of human resources.

ARL isn’t quite an entry-level business — it hopes to play in the space above the MFC.

Provide and protect

At the launch, once the frivolities were over, it was suggested that some families which accumulate up to seven funeral policies should lapse a couple of them and divert the funds to life insurance. ARL calls its life policy Provide & Protect, which even has a form of Outbonus as it pays back 20% of premiums every five years.

For much of its target market, this will be the first time that an adviser has actively sought to sell physical impairment (a form of disability cover) and core dread disease. The monthly premium can be as low as R100, including a R20 policy fee.

For those who accept the things they cannot change there is a Serenity funeral plan, and the deluxe plan is rather confusingly called the Serenity funeral premium plan.

Its Siyakhula Invest policy is designed for people who want a smoothed product as they are not comfortable with the volatility of a unit trust. The fees are quite high, with a monthly charge of R7.50 plus a 2.8% deduction. But at least it exposes clients to real assets, as there is a hefty allocation to SA and global equities in the portfolio. It should beat a money market fund in the long term.

Sanlam’s investment in ARL, as with Brightrock, is backing proven teams, and it is adamant that it will not integrate either of these businesses.

Miway Life is a good way to capitalise on happy customers of the core Miway motor insurance brand