Sanlam and Allianz to create joint Pan-African insurance company

The JV will manage the business units of both groups in 29 African countries – but not in SA.
Image: Shutterstock

JSE-listed financial services group Sanlam together with Allianz, a German multinational financial company, are partnering to create the largest non-banking financial services entity in Africa. The companies say the entity will generate a combined total group equity value of over R33 billion.

According to a Sens statement, the companies will invest in the joint venture (JV) for at least 10 years.

Sanlam will hold the controlling interest in the joint entity, while Allianz will hold a minority shareholding with proportional governance rights and minority protections. The initial shareholding split of the entity between Sanlam and Allianz will be 60:40. Allianz will have leeway to increase its shareholding to a maximum of 49% over time.

While the chief executive officer of the entity is yet to be named, the chairmanship is expected to rotate between Sanlam and Allianz biennially.

The companies confirmed that South Africa is excluded from the JV agreement.

Namibia will be included at a later stage, and at a time when Allianz will have the option to increase its shareholding.

The partnership is expected to benefit African customers in 29 countries, with the merged financial expertise of the two companies. This includes providing customers with “best-in-class, innovative insurance solutions”. In turn this is forecasted to generate economies of scale, broader geographic presence, larger combined market share, and a more diversified product offering.

According to Sanlam group CEO Paul Hanratty, the partnership is in line with Sanlam’s ambition to be a leading Pan-African financial services group. Hanratty says the JV “will also strengthen our leadership position in multiple key markets that are core to our Africa strategy, building quality and scale where it matters. We are delighted to have Allianz as partners and believer their expertise and financial strength will add tremendous value to our businesses.”

In its 2021 annual integrated report Sanlam announced its goal to provide access to its products and services to more than 50 million customers in Africa by 2025 under its “2025 Ambition” strategy. The strategy includes new revenues from strategic distribution partnerships of between R5.5 billion and R6.5 billion.

In line with its ambition, the JV company is expected to be ranked as one of the top three in the majority markets where it will operate.

Sanlam shares were up 0.95% by mid-morning trade on Wednesday.

Sanlam shares vs JSE All Share over a week

The JV agreement is dependent on precedent conditions including receiving required approvals from competition authorities, financial/insurance regulatory authorities and customary conditions that Sanlam and/or Allianz would be required to fulfil for each jurisdiction, to name a few.

Nondumiso Lehutso is a Moneyweb intern.

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