Johannesburg - Santam has agreed to acquire 100 percent of the issued shares of insurance administrator Brolink, but will disclose the terms of the acquisition only after it has been approved by the Competition Commission.
Although Santam would acquire Brolink’s entire stake, it said this business would be kept independent of Santam’s insurance activities and would form part of the group’s strategic investments.
Brolink is part of the Kagiso Group and is an insurance administrator of personal lines such as home, vehicle and household portfolios for a number of insurance companies.
It also performs insurance administration for commercial line portfolios and its major clients include Santam, Mutual & Federal and Hollard.
Catering for short-term insurers that want to outsource broker support functions, Brolink provides information technology and business process outsourcing services.
The Centurion-based administrator has regional offices called Eastlink in Nelspruit, Coastlink in Port Elizabeth, Coverlink in Durban and IMSL in Cape Town.
Santam has worked with 20-year-old Brolink for a number of years. It awarded it the Santam Administrator of the Year award for four years and underwrites most of Brolink’s business.
Santam is South Africa’s largest short-term insurer.
Santam chief executive Ian Kirk said that as the industry was likely to see more broker consolidation due to regulatory changes, it was in the best interests of Santam to invest in an administration service provider.
“As an established industry player, Santam needs to continue improving efficiencies as our sector faces a variety of challenges and regulatory changes.
“We believe Brolink’s intimate understanding of the requirements of professionals and intermediaries in the outsourced business channel will help Santam to drive further efficiency and growth,” he said.
Kirk would not comment further on this transaction until it gets the competition authority’s nod.
But Santam expected that having an in-house administrator would improve its operating costs and efficiencies in distribution channels.