Kagiso to buy 30% slice of Santam Risk Finance
Stephen Gunnion
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SANTAM, SA’s largest short-term insurer, is to sell a 30% stake in Santam Risk Finance to Kagiso Treasury Services.
The deal includes Santam Risk Finance’s enlarged business following its acquisition of the Nova Group, which includes Nova Risk and Nova Life.
It bought Nova from Munich Re of Africa, Capital Alliance and Münchener Rückversicherungs-Gesellschaft.
The Nova deal increased Santam’s share of the cell-captive market from 10% to 20%. Cell captives allow clients, such as cellphone companies, to participate in the insurance business without having a licence. In return they pay the cell-captive management fees.
“We believe in this deal we have created a platform to grow this business in a profitable and sustainable manner as it gives us critical mass,” Santam CEO Steffen Gilbert said.
Head of specialist portfolios at Santam Mpumi Tyikwe said the group had concluded the deal with Kagiso in December, but wanted to include the Nova acquisition as part of the deal. He said the transaction was still subject to approval from the regulatory and competition authorities, but he expected it to be final within three months.
He said the group had chosen Kagiso due to its empowerment credentials as well as its interests in the financial services sector.
“They also offer treasury risk services to corporate clients and have an extensive client base which offers cross-selling opportunities,” Tyikwe said.
Gilbert said Kagiso Treasury Services would also be able to expand its interests in financial services, particularly in the short-term insurance market.
Kagiso Trust Investments, which owns a stake in Kagiso Treasury Services, already owns a stake in life assurer Metropolitan and is part of the empowerment consortium investing in FirstRand. It also owns Kagiso Asset Management.
Munich Re said the sale of its stake in Nova was influenced by its commitment to empowerment in the South African insurance sector.
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