Sanlam has acquired 100 per cent stake in Saham Finances as it moves to consolidate the latter’s Rwandan subsidiary with its own local unit — Soras. This will cement its position as an insurance powerhouse in the market.
The two organisations are still finalising regulatory procedures and working on a business consolidation plan ahead of the merger expected in June this year.
Sanlam owns 100 per cent of Soras Group after it acquired the remaining shares last year, and it is by far the largest insurer in the country, with a 35 per cent market share and an asset base of Rwf43.58 billion ($50.1 million).
Industry experts say, if approved, the merger could boost the industry as it remains fragmented.
“It is a positive development for the market and it is something we encourage. Instead of having weak scattered insurers it is better to have one big one with the capacity to serve the market well,” said Gaurdens Kanamugire the president of the Rwanda Insurers Association.
He said coming together strengthens capacity to innovate and serve customers better.
“It would serve the market well if other insurers would do the same, instead of having 14 small ones with a capital base of Rwf2 billion ($2.3 million) to Rwf3 billion ($3.4 million).
“If we could have four big firms with a capital base of Rwf20 billion ($23 million) and above, they would be in a much better position to serve the market,” said Mr Kanamugire, who is also the CEO of Phoenix insurance company.
He said in terms of competition, the expansion of Sanlam — a player from a more mature South African market — is expected to have a positive contribution especially in pricing, product development and high-level analysis.
Soras’ board had already notified National Bank of Rwanda (BNR) of intentions to merge the two entities even before they fully took over.
“Following the approval of the transaction, we’ll look at consolidating our businesses in Rwanda and Kenya depending on the terms of regulatory approvals received.
“This will not apply in Nigeria as both Sanlam and Saham have minority shareholdings in their respective operations,” read a statement from Sanlam.
Sanlam owned up to 46.6 per cent shares in Saham Finances, but decided to acquire the remaining shares as well, in a move the company said was the prudent thing to do based on their growth and expansion plans.
Saham had operations in up to 26 countries across Africa and in the Middle East.
“The acquisition of the remaining 53 per cent, which increases our shareholding to 100 per cent in the group is the next logical step for Sanlam, it enables us to have an even more meaningful presence across sub-Saharan Africa and North Africa” said Ian Kirk, the CEO of Sanlam Group.
In 2014, Sanlam Emerging Markets, the cluster charged with expanding the group’s footprint in emerging markets, acquired a 63 per cent stake in Soras Group Ltd, for $24.3 million.
Sources close to the process say the acquisition and subsequent consolidation will see the new entity get a Rwf30 billion ($34.5 million) capital boost — Rwf25 billion ($28.7 million) from Soras and Rwf5 billion ($5.7 million) from Saham.
In 2014, Saham Finances also acquired a 66 per cent controlling stake in Corar-AG, rebranding it to Saham, marking a major financial and operational disruption of the local insurance industry by foreign player.