HARARE - South African insurer Hollard has reportedly set its eyes on acquiring a majority stake in two Zimbabwean insurance companies Hamilton Insurance (Hamilton) and Cell Funeral Assurance (Cell), the Daily News can reveal.
The development also comes as another trans-Limpopo insurer Sanlam has announced plans to acquire a 40 percent interest in Shingai Mtasa’s Masawara Investments Mauritius Limited (MIM), in a deal worth $11,6 million.
While Hollard managing director Frans Prinsloo has fleetingly confirmed the preliminary talks between the three entities, the Johannesburg-based executive would not be drawn into detail about the proposed transaction or negotiations, which started in December 2014.
“Hollard expressed interest provided we… acquire a majority stake in the business (Cell),” he said in a confidential letter seen by this paper, adding, though, that negotiations had been temporarily halted due to the local assurer’s shareholding structure then.
With an eight percent market share of the Zimbabwean funeral business and market — dominated by the likes of Doves and Phillip Mataranyika’s Nyaradzo Group — Cell has emerged as a prime takeover target due to its growth potential and how it complements Hamilton’s business.
Both Hamilton and Cell are beneficially owned by flamboyant businessman Frank Buyanga.
While the funeral assurer is valued at $1,5 million-plus, Hamilton is capitalised to the tune of about $2,2 million.
A privately-owned business, Hollard was founded by Robert Enthoven and his son Patrick in 1980, and has since grown into a $1 billion-a-year enterprise at the back of its life, and short term products.
Having grown into SA’s fourth largest insurer, the company has also expanded into China, Australia, Botswana, Ghana, Mozambique, Namibia, Zambia and has been keen on entering the Zimbabwean market.
A pioneer in the prepaid and social impact insurance (SII) market, Hollard has six million-plus policy holders, Wikipedia says.
Part of its success emanates from selling its insurance products through third-parties such as retailers and telecommunication companies, which include Pep, Edgars, Ackermans, Game, Spar and Truworths — which all have an African presence.
Should the Parktown-based entity succeed in tying up its Cell transaction, this would add another twist to the latter’s link to South African companies after GuardRisk — a cell captive and alternative risk-transfer solutions provider — had emerged as its key backer in the mid-2000’s.
According to Wikipedia, an SII is any insurance-related product or service provided to generate measurable social and environmental impact goals tied to a financial return.
These can be applied in both developed and emerging markets, and underwriting outcomes depend on the circumstances, and degree of social impacts achieved.
“SII… (seeks) to provide risk mitigation… services to socially relevant projects… (to) enhance the probability of success whether by enhancing credit worthiness to attract investment and or to speed up or stabilise cash flows or protecting people processes and assets against the multitude of risks which may otherwise hamper success to the detriment of society,” it said.
Impact insurers are primarily distinguished by their ambition to address social and environmental challenges through insurance coverage. For instance, criteria to evaluate the positive social and environmental outcomes of projects that may arise from insurance services are integrated into the underwriting processes.
These products may include credit, marine, property, engineering and construction, liability and life insurance.
Meanwhile, Sanlam is paying for an MIM stake to get access to its life, short-term insurance and asset management business. The company is part of AIM-listed Masawara Plc.
“We have always… wanted to add Zimbabwe to our portfolio… as we remain optimistic about the prospects of Zimbabwe’s insurance industry,” the company’s head of emerging markets Heinie Werth said then.
Sanlam has been bulking up its presence across Africa, where rapid economic growth has increased disposable incomes to protect people’s wealth.
However, Zimbabwe’s economy has been weak since investors started fleeing a number of socio-economic challenges in the southern African country over a decade ago.
Nonetheless, Sanlam believes the “long-term fundamentals for doing business in Zimbabwe are good notwithstanding the current economic pressures”.