South African short-term insurer Santam Limited (SNT) has obtained a 47.5% stake in UK personal lines underwriting manager Bluesure for 4,5-million sterling (about R57-million), CEO Johan van Zyl announced on Wednesday.
The transaction, which is to be funded out of the company’s own resources, follows on the heels Santam’s acquisition in January of the British niche insurer Westminster Motor Insurance Association for 23,3-million sterling. Westminster specialises in insurance for taxis and private motor rental companies.
“Given Santam’s already dominant position in the local market, it is inevitable that we investigate and exploit opportunities beyond the country’s borders in order to diversify our income base,” said Van Zyl.
“Acquiring interests in insurers that perform well in the competitive British market will have a beneficial financial impact for Santam and is perfectly aligned with our goals for adding further value for stakeholders.”
Bluesure was established in 2001 and functions as a service co- ordinator that brings together the different insurance service providers. It has a premium book of almost 12 million sterling and, despite its short history, is already an established player in the British market.
The other main shareholder in Bluesure is the Benfield Group (also with a 47,5% shareholding), the largest independent reinsurance brokerage in the world, with more than 1 700 employees in 30 offices internationally. Bluesure staff hold the remaining 5% of shares.
In terms of the transaction, Santam is responsible for arranging 20-million sterling of underwriting capacity for Bluesure and intends to do this in association with a local (British) partner. The Santam/ Bluesure partnership itself will develop and provide the products, services and expertise.
“In obtaining Bluesure, Santam gains access to both underwriting expertise of the British market as well as an established distribution channel via brokers, which is indispensable for a new entrant. In addition, the partnership with the Benfield Group offers further potential and opportunities”, said Van Zyl.
The greatest synergy between Santam and Bluesure lies in their corresponding product ranges, he added.
“Bluesure is the first insurer there to offer an umbrella policy with comprehensive insurance and monthly rates – similar to Santam’s Multiplex policy. Our many years of experience with Multiplex, which was launched in 1974 in South Africa, ought to add considerable value.
“Strategically we are now in a favourable position to make the rest of our products available relatively quickly and cost-efficiently in Britain via the same distribution channel.”
Koos van Tonder, executive head of Santam International in London, will serve on the Bluesure board. Santam will also second a senior underwriter there soon, with close co-operation with Santam’s actuarial section being envisaged. – I-Net Bridge