IT IS hard to always take a chief executive at face value. Just because he says he is not doing something, it does not mean that he is not planning to do it.
Take RMB Holdings [JSE:RMH]
CEO Peter Cooper, for instance.
In September 2010, Fin24 approached Cooper on the prospect of a listing for direct insurer Outsurance
as part of a reorganisation of the group's insurance and banking operations.
At the time Cooper said: "There is no need for Outsurance to be listed. It is adequately capitalised and has shareholders with stong capital bases that could be used to finance any capital calls."
Fast-forward to December and RMBH has announced that its insurance operations, which include 90% of Outsurance and a 24% stake in MMI Holdings, will indeed be separately listed under the banner of Rand Merchant Insurance Holdings (RMI).
In the press statement, Cooper comments: "RMI Holdings’ increased stake in Outsurance will give its shareholders greater access to an investment in a direct short-term insurer which has a strong management team, good growth prospects and superior dividend flow."
It is the comment about the dividend that will appeal to shareholders.
The loss of short-term insurer Mutual & Federal Insurance (M&F) earlier this year after parent Old Mutual [JSE:OML]
delisted the company robbed dividend investors of one of the more generous payers, leaving Santam [JSE:SNT]
as the only major listed player in the sector.
Barring a major disaster, short-term insurers are normally great generators of cash, a factor Cooper alluded to when addressing the analyst and media conference call on Wednesday.
If you are looking for a dividend yielding stock, RMI is likely to be that company.
The introduction of Royal Bafokeng Holdings (RBH) throws up another interesting angle.
Earlier this year, RBH upped its stake in listed insurer Zurich Insurance Company South Africa [JSE:ZSA]
to 25.1% to diversify its earnings base.
Two senior insurance sector executives recently commented to Fin24 that while Zurich may have been out of the limelight, it has not been dozing, with some very aggressive management activities taking place behind the scenes.
This could partially be reflected in a recent trading update by Zurich, which said it expected a rise of at least 20% in earnings.
However, as a listed entity Zurich is highly illiquid, with an average daily trade of less than R300 000, and there have always been questions about the merits of being listed.
Perhaps this investment in RMBH by the Bafokeng, and the development of a specialist insurance listing in the form of RMI, might mean Zurich won't be around for much longer on the JSE but investors will get access to a more liquid investment vehicle which is happy to dish out the dividends.