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Back in July of 2019, it was announced that a massive deal had been struck between financial services groups, Momentum Metropolitan Holdings and Alexander Forbes, regarding the former’s acquisition of the Alexander Forbes short-term insurance business. Earlier this month, it was announced that Momentum, following regulatory approval, had been granted the go-ahead for this acquisition to the tune of an impressive R1.94 billion.
An acquisition of this magnitude rarely ever occurs in the SA short-term insurance market, and provides Momentum with a competitive edge going into 2020 as it seeks to become more of a significant, central player in the short-term insurance game. For one, Momentum will not only benefit from strengthened distribution, but their customers will also benefit from an improved value proposition. Strategic moves of this nature are vital to the success of Momentum’s overall growth strategy, as the group continues to strengthen, improve and fast-track quality insurance interests.
Likewise, for Alexander Forbes, the deal is sure to bring a lot of value to shareholders within the group.
So, what exactly has Momentum acquired for their R1.94 billion, and how will this deal impact existing AFI or Momentum clients? Let’s take a look.
According to Momentum Metropolitan CEO, Hillie Meyer, the company’s portfolio of businesses already had substantial market share in life insurance, investments, corporate and health products. The Alexander Forbes acquisition has simply strengthened those synergies, and it’s expected that the combined short-term insurance business of Momentum Short-Term Insurance, AFI and Guardrisk will secure the company’s place among South Africa’s top three short-term insurance players. On the acquisition, CEO of Momentum Metropolitan's Non-Life Insurance Portfolio, Herman Schoeman, said:
So, this is great for both existing and future Momentum clients, but where does that leave existing AFI clients?
The transaction has seen Momentum acquire 100% of all AFI shares, the IT supporting the business, all trademarks of the business, and has more than doubled their existing client base. Upon completion of the acquisition the Alexander Forbes short-term insurance business will be integrated (in several steps, involving the integration of operations and consolidating product offerings) into Momentum’s insurance branch, and will trade under Momentum’s company brand using one insurance licence.
Alexander Forbes CEO, Dawie de Villiers, has assured clients that they would continue to receive the premium benefits and service offering that they have enjoyed with Alexander Forbes Insurance – a sentiment echoed by Momentum.
This is one the biggest reasons for Momentum’s careful phasing in of the integration, so as to better care for the interests of all clients, business partners and employees of both AFI and MSTI.
Until all systems have been integrated, all clients and employees migrated; both businesses will continue to operate as two separate entities, jointly committed.
The future certainly looks bright.
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