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Marine deal to unlock expansion for Hollard

Sep 09 2018 06:19
Lesetja Malope

Insurance giant Hollard is looking to accelerate its expansion plans in more African countries following the announcement of its R5 billion share sale to Japanese insurer Tokio Marine.

Speaking to City Press on Friday, a day after the announcement of the deal in Johannesburg, Hollard CEO Saks Ntombela said Tokio Marine’s 22.5% share buy-in would allow the company to accelerate its expansion plans, which include entering a number of new markets within the continent.

“Our expansion plans include getting into new African markets, partnering with local business and buying majority stakes in local business,” he said.

New markets

Ntombela said that while the company was eyeing six new African markets in which to make inroads, this latest transaction would enable Hollard to be more competitive on the local front as well.

Last year, Hollard bought Regent Insurance Group for almost R1.8 billion, and in the process doubled its black ownership of Hollard SA from 10% to 20%.

The deal with Tokio excludes the two Hollard businesses – in Australia and New Zealand – as those are part of the broader private investment group, Yellowwoods, and are independent.

Ntombela said the deal, which has been in the pipeline since early last year, would see Tokio Marine have two seats on the company’s board of directors.

Although the deal is still awaiting regulatory approval, Ntombela said he was confident that it would be finalised by year-end.

Asked how it came about, Ntombela said the board had decided some time back to look for an investor, and Tokio Marine was among those approached with an offer to buy in.

“We approached other companies as well, but Tokio Marine was the most suitable,” Ntombela said, adding that Hollard and the Japanese entity were already familiar with each other as they have a joint venture operation in Indonesia.

“Being a purpose-driven organisation, we prioritised alignment with our purpose and culture. But we also looked for a similar approach to building businesses through long-term, mutually beneficial partnerships,” said Ntombela.

“We were thrilled to find that Tokio Marine not only shares our partnership philosophy, but also has a purpose which echoes ours. Hollard’s purpose is ‘to enable more people to create and secure a better future’, while Tokio Marine’s is ‘to be a good company’.

“We have already collaborated with Tokio Marine on several interesting projects and are looking forward to growing this relationship in other markets,” he added.

Ntombela said that although the deal would see the oldest Japanese insurer entering the 10 African markets in which Hollard already operates, Hollard would not be moving into the 38 other countries in which Tokio Marine has a footprint.

Game-changer

He said the deal was a game-changer in that it not only represented a significant vote of confidence in Hollard, but also in South Africa and the African continent.

“The transaction is aligned with President Cyril Ramaphosa’s call for $100 billion to be invested in the country over the next five years, and is an endorsement of the well-regulated South African financial services sector.

“The access to capital that this partnership provides will help to accelerate our ambitious plans in Africa and Asia.”

Hollard SA and Hollard International wrote a combined premium income in excess of R25 billion in the year to June 2018 across short-term and life insurance operations in South Africa, Botswana, Ghana, Lesotho, Mozambique, Namibia, Zambia, Indonesia and China.

While Hollard SA houses the second-largest short-term insurer in South Africa, its international counterpart includes the largest short-term insurer in Botswana and the second-largest in Namibia.

Tsuyoshi Nagano, CEO of the Tokio Marine Group, echoed Ntombela’s sentiments, saying that in addition to its impressive track record in building insurance businesses across the African continent, Hollard’s approach to business was similar to that espoused by Tokio Marine.

“We feel that Hollard’s corporate vision, values and sense of mission to help customers and society as a whole is deeply embraced within the organisation. We are excited about building a significant presence in Africa through this partnership.”

The Tokio Marine Group was established in 1879 and incorporates Japan’s oldest insurance company, Tokio Marine Insurance. The group employs almost 39 000 people in 38 countries and regions, and has an annual turnover of R725 billion.

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hollard  |  insurance  |  expansion
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