Financial Mail and Business Day

Alexander Forbes to sell life unit

• Retirement fund administrator agrees to offload its group risk and retail life unit as it completes its exit from the insurance industry

Garth Theunissen Investment Writer theunisseng@businesslive.co.za

Sanlam, Africa’s biggest nonbanking financial services group, says it has reached an agreement to buy Alexander Forbes’s group risk and retail life business for R100m, though that amount could be subject to adjustment. The sale will help Alexander Forbes complete its exit from the insurance industry.

Sanlam, Africa’s biggest nonbanking financial services group, said on Monday it had reached an agreement to buy Alexander Forbes’s group risk and retail life business for R100m, though that amount could be subject to adjustment.

The proposed transaction, which still requires regulatory approval and certain conditions to be met, will be funded from Sanlam’s cash resources and will be paid in instalments.

Half the value of the sale will be deferred in two equal payments, 12 and 24 months from the effective date of sale, which is subject to both transacting parties fulfilling certain conditions as well as receiving the goahead from competition authorities.

Alexander Forbes, which announced its annual results on Monday, said it had reached an agreement on June 11 to sell the business unit as it completes its exit from the insurance industry.

“This transaction supports our strategy of building a fortress position in SA and will diversify Sanlam’s pool of life insurance risks,” Sanlam Group CEO Paul Hanratty said in a statement.

“We look forward to welcoming the Alexander Forbes Life clients and employees to Sanlam.”

Alexander Forbes Life’s group risk and retail life books reported about R1bn in combined gross written premium for the year to end-March 2021. The transaction will add about 210,000 members to Sanlam’s group risk business and 3,700 policies to its retail life business.

“This disposal is the final step in our move away from providing insurance underwriting,” said Alexander Forbes CEO Dawie de Villiers. “The proposed transaction not only benefits Alexander Forbes through the realisation of value for shareholders but also balances solutions for clients and protects and values the employees of the business.

“We will continue to play a key role to the valued clients of Alexander Forbes Life, delivering best advice throughout the transition and into the future.”

As part of the final steps towards completing its exit from the insurance industry, Alexander Forbes also offloaded its Namibian short-term insurer to Momentum during its past fiscal year as it repositions itself to focus on its core business of pension fund administration, employee benefits and consulting.

The retirement fund administrator delivered operating income of R3.15bn in the year to end-March 2021, while headline earnings per share from continuing operations rose 4% year on year to 33.4c, according to a Sens statement on Monday. It declared a final dividend of 9c per share, taking its annual dividend to 22c a share.

Alexander Forbes also said on Monday it was considering “a sizeable acquisition” that would help it scale up its core business offering.

R100m how much the Sanlam deal is worth

210,000 members will be added to Sanlam’s group risk business and 3,700 policies to its retail life business

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2021-06-15T07:00:00.0000000Z

2021-06-15T07:00:00.0000000Z

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