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Disposal of short-term insurance business in Namibia
ALEXANDER FORBES GROUP HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration Number: 2006/025226/06
JSE Share Code: AFH and ISIN: ZAE000191516
(Alexander Forbes or the Company or Group)
DISPOSAL OF SHORT-TERM INSURANCE BUSINESS IN NAMIBIA
1. Background and Rationale
The board of directors of the Company is pleased to announce that it has entered into a binding agreement with Momentum
Short Term Insurance (Namibia) Limited (MSTI Namibia), a subsidiary of Momentum Metropolitan Holdings Limited, for the
sale of Alexander Forbes Insurance Company Namibia Limited (AFI Namibia or the Business), subject to certain conditions
precedent (Proposed Transaction). AFI Namibia is a wholly owned subsidiary of Alexander Forbes Namibia Holdings
Proprietary Limited (AF Namibia Holdings). Seventy-five (75%) of AF Namibia Holdings shares are held indirectly, through
a Namibia holding company, by Alexander Forbes Limited (South Africa) with the remaining 25% held by Cherish
Investments Proprietary Limited. The net sale proceeds will be distributed to shareholders of AF Namibia Holdings, 75% of
which will be received by Alexander Forbes Limited, a 90% held subsidiary of Alexander Forbes.
The Proposed Transaction is in line with the previously announced intention to dispose of the Group’s insurance cluster. The
disposal of AFI Namibia further delivers on the implementation of the Company’s advice-led and capital-light strategy.
Dawie de Villiers, Chief Executive Officer of Alexander Forbes, says: “We are pleased with the proposed transaction which
brings to a close the sale of all our short-term insurances businesses. In selecting MSTI Namibia, we are ensuring our clients
will continue to experience the superior benefits and service excellence they have at Alexander Forbes. MSTI Namibia
understand the value proposition we have provided to our clients and our employees and will continue to deliver and enhance
these values.”
2. Particulars of the Proposed Transaction
2.1. Overview of the business
AFI Namibia is a personal and commercial lines insurance provider with a business model that focuses on a personalised
approach to sales and service with niche offerings. The Business is a leading insurance provider in Namibia (fourth largest
by market share in gross written premium).
2.2. Overview of the Proposed Transaction terms
AF Namibia Holdings will dispose of 100% of the shares in AFI Namibia and the trademarks specific to the Business for a
cash consideration of R50 million. Implementation of the Proposed Transaction is subject to various conditions precedent,
as detailed in paragraph 2.3 below, and is expected to be concluded in the second half of 2020, assuming timely receipt of
the necessary approvals.
2.3. Conditions precedent
The Proposed Transaction is subject to the following outstanding conditions precedent:
• Approval from the Namibian Competition Authorities;
• Regulatory approvals in accordance with the Namibian Short-Term Insurance Act, 4 of 1998; and
• The conclusion of certain ancillary agreements including transitional services and brand licencing.
3. Net asset value and profits attributable to AFI Namibia as at 31 March 2019
The Business was classified as a discontinued operation in the Group financial statements for the year ended 31 March
2019. The net asset value of the Business, including the intangible assets (R56 million), as well as inter-company balances
and investment in subsidiaries, held for the Business within the Group structure amounted to R67 million as at 31 March
2019. The reported profit after taxation for the Business for the year ended 31 March 2019 amounted to R2.6 million.
The historical information for the Business was prepared in accordance with International Financial Reporting Standards and
has been audited by the Group's external auditors.
4. Utilisation of proceeds
In relation to the planned utilisation of the cash proceeds, the AF Namibia Holdings board of directors will take into
consideration the liquidity requirements and investment needs of the Namibian group before distributing the remaining
available cash to shareholders.
The cash received by the Company after minority distributions will be included in our analysis of available cash and will form
part of the surplus capital of the Group. In line with our strategy of being capital-light, the Board will assess the surplus capital
and cash position in relation to the Company’s future liquidity and capital requirements. Any surplus cash available above
these requirements will be distributed to shareholders.
5. Categorisation
Shareholders are referred to the various previous announcements released by the Company on the Stock Exchange News
Service (SENS) regarding the disposal of its short-term insurance business in South Africa to Momentum Metropolitan
Strategic Investments Proprietary Limited (MMSI), a wholly owned subsidiary of Momentum Metropolitan Holdings Limited
(Initial Transaction). The Initial Transaction constituted a Category 2 transaction in terms of the JSE Limited Listings
Requirements. Further in terms of the Listings Requirements, the Initial and Proposed Transaction together trigger the
aggregation rules, and, on this basis, the Proposed Transaction constitutes a Category 2 transaction and, accordingly, no
shareholder approval is required.
Carina Wessels
Executive: Governance, Legal and Compliance
14 April 2020
Sandton
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 14-04-2020 08:00:00
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