| Tue 23 Apr 2002, 0:00 | | Liberty / Libhold - Announcement |
|
Liberty Group Limited Liberty Holdings Limited
(Incorporated in the Republic of SA) (Incorporated in the Republic of SA
(Registration number 1957/002788/06) (Registration number 1968/002095/06
("Liberty") ("Libhold")
Share code: LIBU Share code: LBH
ISIN Code: ZAE000024543 ISIN Code: ZAE000004032
Liberty and Medscheme Holdings ("Medscheme") have agreed that:
- Medscheme will administer the Liberty Medical Scheme.
- Liberty will continue to sell the Liberty Medical Scheme in the
healthcare market.
- A Joint Venture will be entered into, through which Liberty
financial products will be marketed to members of participating
schemes administered by Medscheme.
i capital advisers are authorised to announce that Liberty and Medscheme,
having identified mutual interests and complementary strengths in the
Financial Services and Healthcare sectors, will implement a number of
strategies to add value to both organisations, and ensure ongoing cost-
effective services to members of medical schemes administered.
1. Background
With fast-rising medical costs placing continuous pressure on benefit levels
and member contributions, it is vital for service providers to protect the
interests of scheme members.
Against this background, Liberty and Medscheme evaluated a range of options
for their existing respective operations, and concluded that there is
considerable scope for co-operation in a number of areas of mutual benefit -
in particular to harness Liberty's strength in product development and
distribution, and Medscheme's complementary capability in healthcare
administration.
2. Healthcare Administration
Medscheme is South Africa's leading administrator of medical schemes, with
over two million lives under administration, and already administers
Liberty's staff Medical Scheme.
In order to benefit from Medscheme's core competence of medical scheme
administration and economies of scale in this field, the trustees of the
Liberty Medical Scheme have agreed, subject to undertakings as to service
levels, fees and a seamless transition, to transfer the administration of
the Liberty Medical Scheme from Liberty Healthcare (Pty) Ltd ("Liberty
Healthcare") to Medscheme. This will commence as soon as possible, subject
to the approval, where required, of the relevant authorities. The medical
scheme currently has two product option ranges, ProVia and ProCure.
Liberty will retain the following involvement in the Liberty Medical Scheme:
- Liberty's distribution forces will continue to market membership of the
Liberty Medical Scheme.
- Liberty Healthcare will continue to provide full sales and marketing
support to Liberty's distribution forces.
- Liberty will continue to reinsure some of the risk of the Liberty Medical
Scheme in terms of the reinsurance contract currently in place between
Liberty and the Liberty Medical Scheme.
- Liberty Healthcare will continue to provide input to product development
and benefit design.
3. Agreement to Form an Insurance Joint Venture
Liberty's wholly-owned subsidiary, Charter Life Insurance Co. Ltd. ("Charter
Life"), and Medscheme Life Ltd. ("Medscheme Life") have agreed to enter a
Joint Venture agreement to market insurance, savings and investment products
("JV products") through financial advisers to the members of participating
schemes under Medscheme's current and future administration. Charter Life
and Medscheme Life will also co-operate wherever appropriate in the
provision of reinsurance and other services to schemes under Medscheme's
current and future administration.
The primary focus of the joint activities will be on the sale of JV products
to members in participating schemes in the high-advice target market
serviced by financial advisers, where Medscheme Life is not already active.
JV product business will be written on Charter Life's insurance licence and
balance sheet, offering synergy with Medscheme's extensive client base.
Medscheme Life will continue to write risk business other than JV products,
but will offer Charter Life first right of refusal on any reinsurance
business in respect of non-JV products.
4. Expected Financial and Staffing implications
The agreement will have no material financial impact on Liberty or Liberty
Holdings.
Both Liberty and Medscheme will use their best endeavours to achieve the
required reduction in total staffing levels through natural attrition,
redeployment within the organisations, and voluntary arrangements.
5. Suspensive condition
The agreement is subject to the approval, if any, required in terms of the
Competition Act No 89 of 1998.
Johannesburg
23 April 2002
Financial adviser : i capital advisers : Legal adviser : Werksmans Inc
Sponsor to Libhold : Merrill Lynch : Sponsor to Liberty : Merrill Lynch
