South African insurer Santam (SNT) announced on Wednesday that it has taken full and unconditional control of the British niche insurer Westminster Motor Insurance Association for 23,3 million British pounds.
Commenting on the acquisition, Santam Chief Executive Johan van Zyl said: “The transaction, which is being financed from our own resources, is an important strategic step for expanding our income base, especially in view of the limited opportunities for organic growth in the South African market.”
He said obtaining an insurer that performs well in the competitive British market will have beneficial results for Santam. He added it was in line with Santam’s goals of adding further value for its stakeholders.
Westminster, which specialises in insurance for taxis and private motor rental companies, achieved 24-million pounds in gross premium income in 2002 and declared an underwriting profit of 4,3 million pounds.
“The acquisition price represents a premium over book value of some 6%,” said Van Zyl. “Because the transaction was finalised after our financial year- end, it will have no impact on Santam’s results for 2002. Given the level of profitability and the purchase price, we expect it to contribute positively to Santam’s profitability within this year.”
With a total operating ratio (sum of losses and expenses) of 88,1% for 2001, Westminster was named one of the top performers in its sector for the third consecutive year last year in a general survey of British motor insurers. Similarly, in the 2002 edition of the noted Who’s Who of British Business Excellence, British analysts identified Westminster as one of the fastest-growing companies in the UK.
Santam announced in August 2002 that it was engaged in negotiations to obtain a British specialist insurer. Once Westminster shareholders had given the green light for the transaction to go ahead, it remained subject to approval from the British regulatory authorities. This approval was granted earlier this month.
“Westminster has been in operation since 1948 and is therefore a well- established company and prominent in its sector. In view of this we have decided that the company will continue to operate under its existing trade name,” said Van Zyl.
Koos van Tonder, executive head of Santam International, has been appointed as chief executive of Westminster and Lizet Murray, previously Santam’s head: risk and compliance services, its financial chief. Both will be London-based.
Van Zyl added that it was important that existing knowledge of and expertise concerning the British industry residing within Westminster be retained. Virtually the full staff complement of around 40 people will be retained.
The only exceptions are the current managing director — Trevor Owen — who will however remain in the service of Westminster as a consultant, and the financial chief, Penny Foley, who is retiring. – I-Net Bridge