Sanlam, the majority shareholder in Soras, Rwanda’s second oldest insurer, is being challenged to justify its proposal to rebrand the underwriter under the Saham brand in a proposed merger.
Sources familiar with the goings-on say Soras’ board had already notified regulator National Bank of Rwanda (BNR) of intentions to merge Soras and Saham under the latter’s brand.
The merger would involve both underwriters investing more money in the merged entity, with Soras contributing Rwf25 billion while Saham would inject Rwf5 billion.
According to sources however, the regulator wants justification for the Saham brand taking precedence yet it is contributing the lower value to the merger.
The regulators queries appeared to rhyme with the sentiments of long serving former chief executive and Soras board chair Charles Mporanyi, who is the other significant shareholder with 25 per cent stake in the company.
Sources say the proposed name change was not be received well by Mporanyi, who holds sentimental attachment to the brand and initially opened the door to Sanlam by ceding a portion of his majority stake in the company.
“Their attempts to change the brand name have so far met resistance, and their options could be limited to buying out Mporanyi if the name change is to proceed,” said a source who does not believe the duo of Sanlam and Saham has the money needed for the buyout.
For more than 30 years, Soras has established its brand in the insurance market, and changing it to Saham — a new and weaker player — seems to be the major point of contention between the parties.
Changing the name from Soras is largely seen as giving too much away. However, Sanlam is also bent on stamping its authority, making internal reforms — hence the name change proposal —which started by replacing the old guard at the insurer.
The development comes a month after Sanlam, through its short-term insurance subsidiary Santam, increased its stake in Morocco based Saham Finances, by an additional 16.6 per to bring its total shareholding to 46.6 per cent. The initial 30 per cent stake was acquired in February 2016.
The enhanced stake seems to have placed Sanlam in a better position to initiate the merger with Saham Finances Rwanda subsidiary.
In 2014 Sanlam Emerging Markets (SEM), 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, but has since recapitalised the business and now owns 74.6 per cent.
The Soras group CEO is said to have travelled to South Africa to work on the mechanics of the deal from the headquarters.
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 players.
Soras was established in 1984. It has subsidiaries like Soras Group, Soras General Insurance Ltd and Soras VIE Ltd, which has been one of the most performing players, growing its equity from Rwf150 million in 1984 to Rwf17.9 billion in 2014.
It’s not been all rosy with reports indicating that it is currently working to recover funds lost after company executives fabricated data which was considered in the acquisition process.
Reports recently quoted Ian Kirk, the Sanlam group CEO, saying they found that there was some manipulation of the financial statements on which the company did the acquisition transaction of Soras. He added that they are in the process of rectifying the dent this had caused in the business.
Sanlam also discovered irregular practices in Soras’ general insurance business — Soras Assurances Générales (Soras AG) — toward the end of 2015, although he downplayed the effects of this wrongdoing, there was some damage.
“Over the subsequent six months, both the businesses in Rwanda recovered quite nicely. This is a one-off event, it cost us some money, we provided for everything and now we’re in the process of recovering the money,” he was quoted by Moneyweb.
A decision was taken to suspend the Soras chief executive and financial officer to give room for a thorough forensic investigation, which has taken several months.
It’s reported to have notified the regulator and continues to engage with authorities on the matter.
“You can clearly see that Sanlam has been systematically trying to get Mporanyi out of the running of the business, it would be difficult to do this if he still has significant shares, they have now considerably reduced, they didn’t want him to also continue as chairman, the investigations are still ongoing, it is a big issue” said the source close to the goings on in Soras.
Last year the board appointed Fiacre G Birasa as new chief executive.
Contacted, BNR declined to comment.