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Life assurer sidesteps questions about potential buyout
Aflife profit jumps 75%
June 8, 2005
By Sherilee Bridge-David
Johannesburg - African Life Assurance (Aflife), the financial services group that focuses on the emerging market of Africa, managed to sidestep any questions about its potential buyout yesterday as it reported a 75 percent increase in profit.
The company, which made a name for itself by providing life and funeral cover to low- and middle-income earners, has diversified its business in the past year to include medical cover and fund management.
Aflife`s largest shareholder, Momentum, the insurance arm of the FirstRand group, has hung a `for sale` sign on its 33.38 percent stake in the company. Its second-largest shareholder, Sanlam, which holds 28.43 percent of its shares, is rumoured to be interested in the acquisition.
Acquiring Momentum`s stake would give Sanlam 61.8 percent and control of Aflife. Neither Aflife nor Sanlam have publicly acknowledged a courtship.
But Aflife`s presentation to investors and analysts suggested the company was being dressed to entice suitors.
Sanlam has been snapping up Aflife shares, tripling its stake in the past year, and many analysts believe it may push ahead with the acquisition once it has cashed in some or all of its R9.9 billion in Absa shares.
Jeremy Rowse, the chief executive of Aflife, suggested last month that the buyer might want to study the latest set of financial results before making its next move.
Aflife posted leap in net income from R170.7 million, or R1.59 a share, to R298.8 million, or R2.82 a share, for the 12 months to March.
Headline earnings rose 36 percent to R258.9 million from the R191.1 million reported the year before. Operating profit was up 28 percent. Recurring premium income was up 4.2 percent and single premium income was up 48 percent.
Its embedded value, which is an estimate of an insurance company`s value, was up 13 percent to R2.4 billion, or R22.76 a share, after provision for the management and empowerment share options took off 7 percent. Aflife operates in seven countries outside South Africa, but the local life operations remain its lifeblood, contributing 59 percent to the total. African Life Health contributed 19 percent to operating profits in the period.
`A great deal of activity is going on across the three strategic focus areas to see how each can assist the others to the benefit of the group,` said Rowse.
A final dividend of 63.5c a share was declared, bringing the annual dividend to R1.06.
According to Bloomberg data, the stock has risen 25 percent this year, making it the biggest gainer in the FTSE/JSE Africa life assurance index.
Aflife`s shares closed 10c weaker at R23 yesterday. The life assurance sector improved 0.4 percent.
