Santam acquires majority stake in Multichoice insurance business
Santam has concluded agreements with Sanlam Life Insurance Limited to acquire 60% of the A1 Ordinary Shares in MultiChoice Group’s insurance division, NMS Insurance Services (NMSIS).
In a statement released on 29 November, South Africa’s largest short-term insurer said that this agreement is for an initial cash consideration of R925 million.
It said that it would fund the acquisition from existing cash resources.
NMSIS is a licensed composite micro-insurer and financial services provider in South Africa, authorised to offer both general and life insurance.
For the past 20 years, it has been underwriting insurance products under MultiChoice’s DStv brand, specialising in device, installation, funeral, subscription waiver, and debt waiver coverage.
In June 2024, Sanlam announced that it had acquired a 60% shareholding in NMSIS.
The NMSIS shares come in two types: Ordinary Shares, which give holders a share of the profits from life insurance products, and A1 Ordinary Shares, which give holders a share of the profits from general insurance products.
For the financial year ended 31 March 2024 (FY24), NMSIS increased its in-force policies by 19% to 3.3 million. Life products were introduced three years ago and have seen major growth, accounting for 30% of in-force policies.
NMSIS’s profit after tax in FY24 increased by 51% to R296 million and its net asset value was R277 million.
Santam said that the NMSIS business has “a profitable device insurance book and allows Santam the opportunity to cross-sell other general insurance products to the MCG South African subscriber base.”
The partnership will be limited to MultiChoice’s estimated 8 million South African client base.
“The acquisition will further extend Santam’s reach to serve the under-served market and therefore drive the uptake of insurance and penetration to narrow the protection gap,” said the short-term insurer.
Gloria Tapon Njamo, CEO of Santam’s Partner Solutions business, said the acquisition was an acceleration to the company’s strategy, which seeks to explore new market segments through partnering with other corporates.
“A key strategic pillar and growth vector for Santam is partnering with companies like MultiChoice, which presents us with a unique opportunity to create substantial mutual value,” said Tapon Njamo.
“With a base of approximately 8 million subscribers in South Africa, MultiChoice provides a robust and scalable channel for Santam to distribute tailored general insurance products,” she added.
The Santam Partner Solutions CEO said that this move will leverage their experience in device insurance to increase the penetration of related general insurance products into the MultiChoice subscriber base.
“MultiChoice’s integrated payments platform has the potential to present a solid foundation for offering affordable value-added general insurance products to drive our passion for advancing financial inclusion sustainably through frictionless bundling of payments for services,” said Tapon Njamo.
Tough times for Multichoice
This move comes as MultiChoice reported worsening financial results for the period ending 30 September 2024, with revenue falling 11% to R24.8 billion and operating profit dropping 49% to R2.5 billion.
Losses deepened to R1.8 billion, up from R911 million. The company’s assets declined to R41.5 billion.
Subscriber numbers also shrank by 400,000 in South Africa.
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