ALEXANDER Forbes said yesterday it was selling its risk and retail life business, Alexander Forbes Life (AF Life), to Sanlam for R100 million as it reported a jump in assets under management during the year to the end of March.
The group said the sale was subject to certain conditions, including regulatory conditions.
Chief executive Dawie de Villiers said the AF Life disposal was in line with the group’s strategy to focus on its core advice-led business and be capital light.
“The agreement with Sanlam Life follows a rigorous, impartial and transparent process, and we are pleased with the outcome,” said De Villiers.
De Villiers said the transaction balanced appropriate solutions for AF Life clients, ensuring both a seamless transition for its employees to Sanlam Life Insurance and benefits to shareholders.
“Sanlam is equally committed to delivering on the financial well-being of the clients and employees who are moving across in this transaction,” said De Villiers.
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.
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. AF Life group risk and retail life books reported R1 billion in combined gross written premium for the year to the end of March.
Alexander Forbes revised its strategy in 2019, resulting in the decision to exit the insurance business and the sub-scale African operations.
Alexander Forbes Insurance Company Namibia was sold to Momentum Short Term Insurance. The group also completed the exit from the insurance businesses.
The group reported a 29 percent increase in assets under management, surpassing the R400bn mark.
Operating income from continuing operations remained flat at R3.153bn, and cash generated from continuing operations increased to R977m from R936m a year earlier.
The group declared 9 cents-a-share final gross cash dividend, taking the final dividend to 22c a share.
“The board believes the surplus cash and capital position, after the payment of the final dividend, will still provide sufficient liquidity and capital strength. This is expected to provide Alexander Forbes with a solid base to withstand the adverse impact of Covid-19,” said the group.
Headline earnings from continuing operations were up 4 percent year-onyear to 33.4c per share.
Alexander Forbes shares declined 0.51 percent on the JSE yesterday to close at R3.89.