South Africa-based financial services firm, Sanlam (JSE: SLM, NSX: SLA), controls just 2% of Uganda’s insurance business but it has shown its determination to upgrade its market share with the planned acquisition of Lion Assurance Company (LAC).
The deal worth US$5.7million awaits approval from the Insurance Regulatory Authority of Uganda (IRA-U).
Sources familiar with the transaction told The Independent that Sanlam Group’s subsidiary in Uganda, Sanlam General Insurance Ltd, is currently preparing to integrate LAC into its operations.
“The company has so far submitted an application to IRA-U ahead of the planned merging of the two companies,” the source said.
This comes nearly a month since Maureen Erasmus, an independent non-executive director at Masawara Plc, LAC’s parent company, said an agreement for disposal of the Ugandan subsidiary was inked in May this year.
Masawara Plc is incorporated in Jersey and is listed on the London Stock Exchange with about US$300 million in assets mainly in Zimbabwe and Southern Africa region.
Erasmus told the Zimbabwean newspaper, Daily News, that the agreement for the disposal of the Group’s investment in LAC was entered into on May 22, 2017 and ‘is subject to conditions precedent inter alia the receipt of regulatory approvals.’
She added that the timing of the receipt of the regulatory approvals will have an effect on the timing of the receipt of the sales proceeds that will be utilised to settle the Group’s long term facility.
Masawara Plc acquired a loan worth US$11million from First Rand Bank Limited, AfrAsia Bank Limited and Sanlam Life Namibia Limited at 10% fixed interest rate in 2015 to pay TA holdings Limited’s minority shareholdings.
As part of the process for any new acquisitions, Sanlam has already written to the Lusaka-based Common Market for Eastern and Southern Africa (COMESA) Competition Commission seeking for approval to acquire LAC in Uganda.
Sanlam, which entered the Ugandan insurance market through a 50.3% acquisition of NIKO insurance in 2013, is a much smaller insurance entity, ranked 14th out of the country’s 21 non-life insurance companies.
In 2015, it recorded Shs9.33bn in gross underwritten premiums, down from Shs10.4bn in 2014 and Shs 8.25bn in 2013, according to the data from IRA-U.
But it has a strong backing of its parent company, Sanlam Group, listed on the Johannesburg and Namibian Stock Exchanges with a market capitalization of $11 billion as of March 2017.
The company also has presence in a number of African countries including Burundi, Kenya, Malawi, Mauritius, Swaziland and Zambia in Africa as well as US, UK and Asia.
On the other hand, LAC, which is ranked fourth, recorded a gross underwritten premium of Shs 35.2billion in 2015, up from Shs23.7billion in 2014 and Shs19.1billon in 2013.
Last year, it recorded a 67% growth in net profit to Shs5.36bn on the back of innovations and take-over of AIG brokers, according to its parent company’s financial statement for 2016.
