Hollard completes Regent acquisition

By: Hollard

Hollard nsurance Group completes R1.8 billion acquisition of the Regent Insurance Group from Imperial Holdings.

The Hollard Insurance Group, South Africa’s largest independent insurance group, has cemented its place as South Africa’s second-largest short-term insurer, with the completion of its R1.8 billion acquisition of the Regent Insurance Group from Imperial Holdings.

The Regent Insurance Group comprises of insurance operations and investments in South Africa, Botswana, Zambia and Lesotho.

The acquisition was formally completed following Financial Services Board approval of the South African leg of the transaction, after South African Competition Tribunal approval was received in April.

The conclusion of the South African portion of the deal comes after Hollard International Holdings’ successful acquisition of the Regent Group’s non-South African interests in Botswana, Zambia and Lesotho for an upfront consideration of R697 million in January 2017.

“Acquiring Regent is an important milestone for Hollard, given our objectives of increasing our African footprint and building scale in our South African business. The deal expands our life distribution capability and significantly enhances our presence and capability in the commercial vehicle space” said Nic Kohler, CEO of Hollard Insurance Group.

Kohler notes that the integration of the two businesses will strengthen Hollard’s position as South Africa’s largest independent insurance group, and result in a consolidated operation that employs more than 3 600 people and generates more than R20 billion per year in premium income.

The earlier acquisition of Regent’s non-South African interests has already supported Hollard’s international growth, which now contributes more than 25 percent of the Group’s profits and is enjoying growth of almost 30 percent per annum.

Hollard is now the largest short-term insurance company in Botswana, and entered its seventh African market in Lesotho through the acquisition.

“Hollard is actively pursuing opportunities in sub-Saharan Africa and other markets where we see potential for growth,” said Kohler. “This expansion has been enabled by a strong skills base, infrastructure and balance sheet, as well as a partnership approach that places a premium on matching cultures,” he continued.

Hollard originally announced its intention to acquire the Regent Group from Imperial in September 2015, subject to regulatory approvals.

Following a lengthy competition authority approval process, the transaction was restructured to exclude Regent’s Motor Value Added Products and Services business, which will now be retained by the Imperial Group.

Kohler emphasised that existing Hollard and Regent policyholders will continue to enjoy the same benefits and commitment to service excellence that they are currently receiving, as well as additional peace of mind that their policies are underwritten by a larger entity, with enhanced financial and technical resources, and competitive pricing.

“Insurance is a people business, and in an industry in which skills are at a premium, the unification of two strong industry players will create an insurer with a comprehensive set of skills that will benefit intermediaries and customers alike,” said Kohler.

“Hollard was founded more than 35 years ago supported by long-term, genuine and mutually beneficial relationships, and strengthened by our commitment to doing things differently in order to make a difference,” Kohler added. “We want to help our customers, our brokers, and our employees to make positive changes in their lives – and we look forward to extending this to Regent’s employees, brokers and customers too.”

COVER spoke to Willem Smith, Head of Hollard’s personal lines area and New CEO of Regent and asked him a few questions around the purchase of Regent by Hollard.

What were your main challenges in the purchase?

Most probably the duration of getting agreement from the Competition Commission and therefore between Imperial and ourselves. The expectations of all parties needed to be matched. This was complicated by the fact that we needed to change the deal arrangements to meet the Commission’s requirements. Their were issues with the Commission and the Value Added Products needing to be moved to the First Rand stable. However, this part of the deal had to restructure so the value added products remains in Imperial. It was a difficult process to manage through. Concerns from business are that you don’t know what to expect and how the Competition Commission will interpret agreements and what issues will come up. The insurance industry is very complex and very different from retail and other industries. We had to do a lot of explaining on how we operate and how insurance works. This was very time consuming and took a lot of interaction.

What were the main reasons for the purchase?

Three elements appealed to Hollard

  1. Regent is not too dissimilar to Hollard from a culture perspective. It is big but not too big.
  2. There are many complimentary skills there. The Life business is very complimentary to us. It also added greatly to our African footprint. Hollard is now the largest insurer in Botswana and we are now in seven countries outside South Africa.
  3. Commercial trucking in Regent is very strong and they have lots of skills and very effective tools in place here. For example, they have sophisticated 24/7 driver behavior monitoring integrated in their business. This assists not only business owners of trucks a great deal but also assists us in managing loss ratios.

Where to from here?

The easy answer is that over the next 18 to 24 months will mostly be consumed by proper integration.