Clientèle Limited’s acquisition of 1LIfe Insurance was accretive and would result in a combined embedded value of about R7.8 billion, with almost 1.5 million contracts that would improve scale and enhance future value, a statement said on Friday.
Clientèle had announced on October 24 that it had entered into an agreement with Telesure Investment Holdings (TIH), for Clientèle to acquire 100% of the share capital of 1Life held by TIH for a purchase consideration that would be settled through an issue of shares in Clientelè.
The companies announced the landmark conclusion of the merger agreement on Friday.
Clientelè’s share price increased 1.4% to R10.90 on Friday, this after the share had traded in a similar range over the past 12 months. Three years ago the share traded at R7.65.
Basil Reekie, the group managing director of Clientèle, said: “Under the merger agreement, both the 1Life and Clientèle brands will continue to operate much the same as they have until now. We are not just merging two businesses; we are bringing together decades of industry expertise, trusted services, innovation and specialised offerings.
“This enables us to offer an even more comprehensive range of value-adding, life-enhancing insurance and investment solutions to existing and new customers of both organisations. We look forward to welcoming the 1Life team to the Clientèle family.”
Laurence Hillman, the CEO of 1Life, said: “Both companies have strong complementary broker, digital and direct distribution channels with diverse product differentiation that can be used to enhance target market opportunities, resulting in incredible synergies and growth opportunities.
“This synergy provides a foundation for the development and delivery of even more innovative insurance products and services for which both organisations have become known. We are excited to join the Clientèle team and look forward to the journey ahead,” said Hillman.
The purchase price was R1.91bn, which was equivalent to the embedded value of 1Life, as at June 30, 2023, plus a control premium of 6.23%. The price would be settled through the issue of 117 815 756 ordinary shares in Clientèle, or 26% of the sum of Clientèle’s issued share capital plus the Consideration Shares as at the date of this announcement.
The groups said the merging of these two well-known insurance entities brought together their expertise in the mass market segment and a strong focus on treating clients well.
1Life specialises in funeral and underwritten life insurance products to South African consumers via direct sales, intermediated sales and through online distribution platforms.
Clientèle is one of South Africa's leading direct distributors of financial services products. Over 30 years it has been offering convenient and easy-to-understand financial services products to the entry-level mass market.
When 1Life commenced operations in 2006, it was the first truly direct life insurer and, having been the largest direct life insurer for over a decade, the company has evolved into a multi-distribution insurer in the entry-level mass market and mass affluent market.
The material shareholders of Clientèle, namely Newshelf 702, River Lily Investments and the Hollard Group, holding between them about 80% of the share capital of Clientèle, had voluntarily decided that they would not vote on the resolution to approve the 1Life Acquisition at the meeting to be convened to consider the 1Life acquisition.
Reekie said he was confident that the merged entity would deliver notable benefits for both organisations and their current and future clients.
“The opportunities coming from the increased scale of the new organisation are self-evident, and we look forward to acquiring more clients, providing more value to existing clients and offering all employees more opportunities, whilst maintaining focus on our core pillars of Treating Clients Well and Treating Employees Well as we execute on the merger,” he said.
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