SOUTH AFRICA – Financial services firm Alexander Forbes has concluded its exit from insurance business following the sale of transfer of its risk and retail life business to South African insurer Sanlam Life for US$7.3 million.
The business operations formed part of AF Life, a long-term insurance company and wholly owned subsidiary of Alexander Forbes that provides group risk and retail life insurance policies with a focus on small to medium clients.
The business, now discontinued, recorded gross insurance premium income of US$72.5 million for the year ended 31 March 2021 from over 630 institutional clients and approximately 3,700 individual clients.
Sanlam purchased the AF Life policies for a total cash consideration of US$ 7.3 million, 50% of which will be deferred in two equal payments, 12 and 24 months, from date of the acquisition.
“We are pleased with the Proposed Transaction, in the context of the current operating environment,” said Dawie de Villiers, Chief Executive Officer of Alexander Forbes.
“This disposal is the final step in our move away from providing insurance underwriting and reaffirms Alexander Forbes’ strength as a trusted adviser to our clients. The Proposed Transaction not only benefits Alexander Forbes, through the realisation of value for shareholders, but also balances solutions for clients and protects and values the employees of the Business,” de Villiers continued.
“Sanlam understands the importance of delivering financial well-being and I am confident that the clients and employees moving across in this process are in good hands. We will continue to play a key role to the valued clients of AF Life delivering best advice throughout the transition and into the future,” he concluded.
“This transaction supports our strategy of building a fortress position in South Africa and will diversify Sanlam’s pool of life insurance risks”Paul Hanratty – CEO, Sanlam
Headquartered in South Africa, Alexander Forbes provides retirement, investment solutions and wealth management to clients in its home country and in Namibia, Botswana, Zambia, Uganda, Nigeria and Zimbabwe.
Sanlam said about 210,000 members of AF Life business would be transferred to the group risk business as part of the transaction and 3,700 to the retail life business.
Sanlam said the proposed transaction would support its growth ambitions in South Africa and bolster its ranking in the group risk and retail life insurance markets.
The sale was subject to certain conditions, including regulatory approvals, and the effective date of the transaction would depend on the fulfilment of the conditions, the groups said.
Sanlam said the transfer of the AF Life policies would be paid for in instalments, and it would fund the transaction from existing cash resources.
Group chief executive Paul Hanratty said Sanlam’s strategy was to deepen client relationships and better client experiences, while offering a compelling and differentiated employee value proposition.
“This transaction supports our strategy of building a fortress position in South Africa and will diversify Sanlam’s pool of life insurance risks,” Hanratty said.
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