Momentum Metropolitan Holdings (MMI) has acquired Alexander Forbes’ short-term insurance business (AFI) against a range of bidders for R1.94 billion. Alexander Forbes put its insurance business, which it had identified as not part of its core business, on sale in March after revising its strategy.
Business Report understood that there was a “crowded field” of potential bidders for the business that included Sanlam, King Price and international companies. MMI non-life insurance portfolio chief executive Herman Schoeman said that in a lower growth market size and scale were imperative for sustainable profitability. “An acquisition of this nature and quality rarely occurs in the South African short-term insurance market,” Schoeman said.
The deal would include a significant scale to MMI’s existing retail short-term insurance business. It would more than double its client base to 150 000 policy holders. MMI had also identified short-term insurance as an industry segment into which capital would be invested to support the group’s growth aspirations. “Both Guardrisk and Momentum Short-term Insurance (MSTI) have shown strong performance in recent years,” Schoeman said.
“This transaction accelerates and broadens the sustainable growth plans for this market segment.” He said the transaction would also strengthen MSTI’s distribution capabilities, unlock efficiencies and provide cross-sell opportunities. Alexander Forbes has a renewed focus on its consulting, administration and investments operations.
The targeted end-state for AFI was an integrated retail short-term insurance unit at MMI, combining MSTI and AFI,” which would trade under the Momentum brand, using one insurance license. AFI and MSTI are complementary businesses in many respects, including their target markets, product sets and customer value propositions. AFI is an established, specialised short-term insurance tied distribution force, while MSTI complements the combined business through its scientific underwriting and pricing capabilities and modern insurance administration platform.