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FOOTBALL IS THE common man’s game. No disrespect there: professional soccer is also a huge business internationally, and its fans the reason why.
Aon Corporation, listed on the New York Stock Exchange, is one of the international leaders in risk management, encompassing among other things insurance and reinsurance brokerage. So it’s perhaps telling that Aon in South Africa will be a name familiar to millions of people.
They know the name because they see it on TV sports channels emblazoned across the chest of Manchester United’s players. But few probably know what the group does.
“Aon in SA has been the best-kept secret. But the shirt sponsorship of Manchester United will help us. When you visit new clients it gives you an easier entry,” says Guy Scott, a director at Aon subsidiary Aon South Africa and CEO of Aon Risk Solutions.
With its acquisition of Glenrand MIB [JSE:GMB] blessed by the Competition Commission and effectively in place, the combined Aon SA and Glenrand MIB create a monster in the short-term insurance industry. In terms of market share and clients it might be bigger than the grandfather in the industry, Alexander Forbes, or at least about equal in size.
Glenrand MIB shares have been suspended on the JSE and it will probably be delisted before month-end. It’s a pity for investors. Insurance shares have previously proved good investments, but the number of listed insurers continues to decline – for example, following the buyout of minorities by Old Mutual [JSE:OML] in Mutual & Federal.
Why did Aon SA target Glenrand MIB?
“We’ve tried to buy it twice before but for various reasons the deals didn’t go through. It’s a case of third time lucky. Glenrand MIB offers us good people, a good direct business, a client base that includes about 30 JSE-listed companies and good client retention. And it creates a leadership position for us in SA and the rest of Africa,” says Scott.
Aon SA is serious about the South African market. Aon Corp always aims to be market leader in the countries it operates in and the acquisition of Glenrand MIB will put it in a market-leading position here.
“We’re very excited at the possibilities the transaction and our combined teams will bring to the benefit of our clients and colleagues,” says Anton Roux, CEO of Aon SA and for sub-Saharan Africa.
But what did Aon pay to gain this market leading position?
Scott will only offer what he calls the “diplomatic answer” – which is, he won’t reveal the price. “We’re a private company and the information is confidential. But we see it as fair value.”
Though Aon SA might be a private company it’s part of a quoted group – so that point could be argued. But it’s not too hard to get a fair idea of the price by going back to December 2010 and Aon’s firm intention statement to buy the entire issued share capital of Glenrand MIB. Though the offer was separated into ordinary and black empowerment shareholders it basically came down to 200c/share.
The market knew that, because Glenrand MIB shares were trading at 203c/share when suspended, which probably puts the price at just under R600m – much in line with Glenrand MIB’s market capitalisation of R605m.
So it seems it was a market price. Unusual in these times, when many acquisitions are made at a discount. Aon must have wanted Glenrand MIB badly.
“The acquisition is in line with our global operations to be in a leadership position. Innovation is core to our business, which will be evident moving onwards,” says Scott.
But competition is tough in the industry in SA, not least from direct insurers such as OUTsurance that bypass brokers.
“We’ll challenge the direct model. We believe intermediaries add value. We have a more professional offering, aimed at the high net worth market through Aon and now also the middle income personal lines clients, through Glenrand MIB.”
Scott says despite its valuable Man United shirt sponsorship, Aon will have to do some extra work “to uplift our profile. With an acquisition like this you become a bit internally focused. We must make sure we become externally focused on new business opportunities.”
So for readers considering firing their short-term insurance broker – often a temptation – there’s a new broker in town. And the next time you watch Manchester United increase its lead in the English premiership league you’ll know who Aon is.
* This article was first published in Finweek.
* To read more Finweek articles, click here.
Aon Corporation, listed on the New York Stock Exchange, is one of the international leaders in risk management, encompassing among other things insurance and reinsurance brokerage. So it’s perhaps telling that Aon in South Africa will be a name familiar to millions of people.
They know the name because they see it on TV sports channels emblazoned across the chest of Manchester United’s players. But few probably know what the group does.
“Aon in SA has been the best-kept secret. But the shirt sponsorship of Manchester United will help us. When you visit new clients it gives you an easier entry,” says Guy Scott, a director at Aon subsidiary Aon South Africa and CEO of Aon Risk Solutions.
With its acquisition of Glenrand MIB [JSE:GMB] blessed by the Competition Commission and effectively in place, the combined Aon SA and Glenrand MIB create a monster in the short-term insurance industry. In terms of market share and clients it might be bigger than the grandfather in the industry, Alexander Forbes, or at least about equal in size.
Glenrand MIB shares have been suspended on the JSE and it will probably be delisted before month-end. It’s a pity for investors. Insurance shares have previously proved good investments, but the number of listed insurers continues to decline – for example, following the buyout of minorities by Old Mutual [JSE:OML] in Mutual & Federal.
Why did Aon SA target Glenrand MIB?
“We’ve tried to buy it twice before but for various reasons the deals didn’t go through. It’s a case of third time lucky. Glenrand MIB offers us good people, a good direct business, a client base that includes about 30 JSE-listed companies and good client retention. And it creates a leadership position for us in SA and the rest of Africa,” says Scott.
Aon SA is serious about the South African market. Aon Corp always aims to be market leader in the countries it operates in and the acquisition of Glenrand MIB will put it in a market-leading position here.
“We’re very excited at the possibilities the transaction and our combined teams will bring to the benefit of our clients and colleagues,” says Anton Roux, CEO of Aon SA and for sub-Saharan Africa.
But what did Aon pay to gain this market leading position?
Scott will only offer what he calls the “diplomatic answer” – which is, he won’t reveal the price. “We’re a private company and the information is confidential. But we see it as fair value.”
Though Aon SA might be a private company it’s part of a quoted group – so that point could be argued. But it’s not too hard to get a fair idea of the price by going back to December 2010 and Aon’s firm intention statement to buy the entire issued share capital of Glenrand MIB. Though the offer was separated into ordinary and black empowerment shareholders it basically came down to 200c/share.
The market knew that, because Glenrand MIB shares were trading at 203c/share when suspended, which probably puts the price at just under R600m – much in line with Glenrand MIB’s market capitalisation of R605m.
So it seems it was a market price. Unusual in these times, when many acquisitions are made at a discount. Aon must have wanted Glenrand MIB badly.
“The acquisition is in line with our global operations to be in a leadership position. Innovation is core to our business, which will be evident moving onwards,” says Scott.
But competition is tough in the industry in SA, not least from direct insurers such as OUTsurance that bypass brokers.
“We’ll challenge the direct model. We believe intermediaries add value. We have a more professional offering, aimed at the high net worth market through Aon and now also the middle income personal lines clients, through Glenrand MIB.”
Scott says despite its valuable Man United shirt sponsorship, Aon will have to do some extra work “to uplift our profile. With an acquisition like this you become a bit internally focused. We must make sure we become externally focused on new business opportunities.”
So for readers considering firing their short-term insurance broker – often a temptation – there’s a new broker in town. And the next time you watch Manchester United increase its lead in the English premiership league you’ll know who Aon is.
* This article was first published in Finweek.
* To read more Finweek articles, click here.
