SOUTH AFRICA — Sanlam, a financial services group, has announced its intention to acquire a 60% shareholding in MultiChoice’s insurance subsidiary, NMS Insurance Services Limited (NMSIS), for an initial sum of R1.2 billion (US$65.93m).
Additionally, a conditional earn-out provision could see MultiChoice earn up to R1.5 billion (US$82.41m) more.
This earn-out is tied to NMSIS’s performance, specifically the total gross written premium for the year ending December 31, 2026, related to the 60% interest that Sanlam Life is purchasing.
Furthermore, NMSIS is slated to distribute a pre-acquisition dividend of R59 million (US$3.24m), representing excess assets over the minimum solvency capital requirement as of the financial year 2024.
In the financial year that concluded on March 31, 2024, NMSIS demonstrated a robust performance by boosting its active insurance policies by 19%, reaching a total of 3.3 million policies in force.
Introduced three years ago, NMSIS’s life insurance products have seen remarkable uptake and now represent 30% of the total policies in force, indicating significant market penetration and customer acceptance.
Financially, NMSIS has also reported a substantial increase in profitability. For the fiscal year 2024, the company’s after-tax profits soared by 51%, amounting to R296 million (US$14.77m).
Additionally, NMSIS’s net asset value was recorded at R277 million (US$15.21m), reflecting a solid financial position and potential for future growth.
Sanlam, the preeminent insurance provider in South Africa, envisions that this strategic acquisition, executed through its Fintech division, will propel its technological ambitions forward and enhance the reach of financial services throughout the African continent.
The insurer recognizes the potential in MultiChoice’s substantial subscriber base, viewing it as an optimal avenue for cost-effective marketing and cross-selling opportunities. This base provides Sanlam and its partners a captive audience for their financial products and services.
Conversely, MultiChoice gains from Sanlam’s extensive insurance acumen and vast resources in comprehensive financial services. This collaboration will enable MultiChoice to better cater to its customers’ insurance and financial service needs.
Despite selling a majority stake, MultiChoice will maintain a significant 40% holding in NMSIS and a corresponding 40% interest in the broader commercial partnership with Sanlam.
This arrangement ensures that MultiChoice continues to share in the high-growth prospects of the insurance segment.
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