Momentum Metropolitan to buy Alexander Forbes' short-term insurance unit
In a deal worth nearly R2 billion.
South Africa-based insurer Momentum Metropolitan Holdings plans to acquire the short-term insurance business of financial services group Alexander Forbes for around R1.94 billion.
Momentum Metropolitan, which recently changed its name from MMI Holdings, said the unit had identified short-term insurance as an area where it wanted to invest for growth. The acquisition is expected to immediately double Momentum’s retail client base.
Momentum said the ultimate aim was to integrate the purchased Alexander Forbes unit into its current short-term insurance business, and for them to trade under one brand and with one licence. The companies expect the transaction to close before the end of the year.
“This transaction accelerates and broadens the sustainable growth plans for this market segment,” the company said in a stock exchange announcement, adding the Alexander Forbes’ short-term insurance unit had a strong management team and was a good cultural fit.
The acquisition follows that of insurer Guardrisk, also from Alexander Forbes, in 2014. While Alexander Forbes’ and Momentum’s short-term units will be merged, Guardrisk will continue to operate as a specialist insurer, Momentum said.
Alexander Forbes’ short term insurance unit targets the middle- to high-income market in SA, offering personal and commercial short-term insurance. It reported R135 million profit after taxation for the year to end-March. “The transaction consideration reflects the quality of the business and the value that Momentum Metropolitan places on the clients, employees and management team,” Alexander Forbes CEO Dawie de Villiers (pictured) said in a statement.
In March, Alexander Forbes announced a new strategy that will steer the company towards pension funds for institutions – a stark contrast to the board approved strategy under the axed CEO Andrew Darfoor, who focused on growing the retail business that serves individuals.
Alexander Forbes has faced instability in its leadership as the company has lost eight executives in the space of six months after Andrew’s axing in September 2018.