Sanlam offices in Constantia Kloof, Johannesburg. Picture: Karen Sandison/Independent Newspapers
SANLAM plans to acquire up to 100% of the shares of Assupol Holdings (Assupol), through a scheme of arrangement, with a fallback offer to Assupol shareholders for a purchase price of around R6.5 billion.
The proposed deal will see Assupol become part of Sanlam’s retail mass cluster and together with Sanlam Sky, Safrican and the Capitec JV.
Deal Leaders International chief executive Andrew Bahlmann said given the compatibility of the two companies, this deal offered “considerable value”.
He said Assupol’s market capitalisation on the Cape Town Stock Exchange was around R4.94bn at February 1, 2024, but on June 30, 2023, the date of the last audited financial statements, Assupol’s net assets value was R5.39bn, with the embedded value, the more common valuation measure of insurance companies, at R7.07bn, while taxed profit for the year was R716.26m.
“While a flat insurance market may be the immediate spur to this announcement, the considerable strategic synergies behind it given the alignment in markets of the two underwriters, there are not great operational competitive issues at stake and it certainly makes sense from that point of view,” said Bhalmann.
He said shareholders would likely benefit from increased production and reserves.
“It certainly appears from a distance that this is a win-win for shareholders. This is confirmed by the announcement of the two major shareholders in Assupol of their willingness to dispose of their stakes,” he said.
Sanlam said its retail mass cluster CEO Bongani Madikiza would ensure Assupol received the support it needed to flourish in the Group. Assupol would continue to operate with its own brand and identity and separate management team.
Madikiza would oversee the co-ordination of the retail mass businesses within the group as well as make sure they shared intellectual property, best practice, and worked to maximise Sanlam’s position in the market.
Assupol was established in 1913 as a burial society for members of the then South African Police. It has grown into a fully-fledged life insurer, serving those who serve, and leading with innovative products and services.
Assupol provides affordable products tailored for focused markets. The company provides funeral, life, savings and retirement products and services to South Africans from every walk of life.
In its latest financial year to June 30, 2023, Assupol reported an embedded value of over R7bn, gross insurance premium revenue of over R5bn and a solvency cover ratio of 179%.
Sanlam Group CEO Paul Hanratty said in a statement: “The proposed acquisition will allow us to strengthen our fortress South Africa strategy and signifies Sanlam’s commitment to further long-term investment in South Africa.”
He said it placed Sanlam in a strong competitive position in the retail mass segment of the South African market. Given the envisaged synergies, Sanlam was confident the acquisition would deliver accretive value for stakeholders, he added.
Assupol chairperson Dr Reuel Khoza said: “Assupol has always been a stable company, generating great value for shareholders and all its stakeholders. We believe this acquisition by Sanlam will bring even greater opportunities for growth and success. It will not only strengthen our position in the market, but also enhance our ability to provide exceptional value to our clients.”
BUSINESS REPORT