What the Saham deal means for Sanlam in Morocco
After much speculation about whether Moroccan authorities would allow it, Sanlam has wrapped up the acquisition
After seven months of waiting and much speculation about whether the Moroccan authorities would allow an SA player to take over their largest insurer, Sanlam has concluded the acquisition of Saham Finances.
The SA insurer announced on Thursday that it had fulfilled all conditions needed for the transaction to be finalised and the $1bn price tag had been paid to the Moroccan insurer’s parent company, the Saham Group.
“I was always confident that it was going to go through,” said Sanlam CEO Ian Kirk on Thursday.
The insurer already owned 46.6% of Saham Finances but the acquisition of the remaining 53.37% will give Sanlam direct presence in 33 countries in Africa. It will give Sanlam access to 65 subsidiaries across Africa, a network of 700 branches, more than 3,000 employees and $1.2bn in annual turnover.
Saham Finances also has a presence in the Middle East. Sanlam will hold a 90% stake, with its short-term insurance arm, Santam, getting the remaining 10%.
Saham Finances has provided Sanlam the opportunity to penetrate the francophone region of Africa, which Kirk says would not have been easy for an anglophone player.
“We are in a unique position … They were trying to be a pan-African player like we are. They are the largest in Africa outside of SA for general insurance; we are the largest for life insurance. It’s just a perfect combination,” said Kirk.
But Warwick Bam, head of research at Avior Capital Markets, said while Sanlam’s footprint in Africa will be difficult to match, it is likely to still face competition in the large markets of Nigeria, Ghana and Kenya.
“The African market remains complex with risk profiles differing substantially from country to country. Despite its Moroccan roots, Saham is not immune to political risks which, as MTN has experienced in Nigeria, remain significant,” Bam said.
The two insurers have worked together since 2016 and have had time to divide their focus areas according to who has the best expertise. Sanlam Emerging Markets will run all life insurance operations in Africa, Saham Finances will take care of general insurance and Santam will be responsible for specialist insurance and reinsurance.
Sanlam said it will not be rebranding Saham Finances’ operations as Sanlam. Instead Saham will be branded as a “member of Sanlam Group” unless Saham Finances’ management team decides otherwise in future. Even if Saham Finances rebranded in other markets, Kirk said they would like to retain the Saham brand in Morocco. Saham Finances’ management team will also not change and will remain responsible for all operational and strategic decisions as far as general insurance is concerned.
“Saham has a very capable team. We’ve been working together for some time. The management team actually wanted to join Sanlam. They know how we operate and we like how they operate.”
With a turnover of more than $1.2bn and $77.4m earnings in the 2017 financial year, Saham Finances will contribute just below 10% of Sanlam’s profits going forward, said Kirk. Saham Finances had $850m in net assets at the end of 2017.