By Lehlohonolo Lehana.
Sanlam will buy a 60% stake in MultiChoice’s insurance business, NMS Insurance Services Limited (NMSIS) for 1.2 billion rand in cash upfront and a potential performance-based earn-out of up to 1.5 billion rand, the groups said.
NMSIS is micro-insurer and authorised financial services provider, is licensed to underwrite both non-life and life insurance products. It has been writing insurance for the past 20 years under the DStv brand of MultiChoice focussing on device, installation, funeral, subscription waiver and debt waiver insurance products.
NMSIS has demonstrated robust growth in recent years, increasing its in-force policies by 19% to 3.3 million for the financial year ended 31 March 2024. Life products, introduced three years ago as NMSIS diversified beyond device insurance, experienced rapid growth and account for 30% of in-force policies.
Sanlam believes that the transaction, through its Fintech cluster, will allow it to advance its technology strategy to expand access to financial services across Africa.
“MultiChoice’s extensive subscriber base offers Sanlam and its affiliates a unique platform and attractive opportunity for cross-selling and cost-effective marketing to an actively engaged subscriber base.”
MultiChoice, on the other hand, gains access to insurance expertise, comprehensive financial services resources and Sanlam’s financial services operations across Africa to address its customer’s needs.
MultiChoice will still retain a 40% interest in NMSIS and a 40% interest in the broader commercial venture with Sanlam, allowing it to benefit from the segment’s high-growth potential.
In terms of the sale, MultiChoice will receive an upfront payment of R1.2 billion for the 60% stake.
There is also a potential earn-out payment of up to R1.5 billion for MultiChoice’s 60% interest sold to Sanlam Life, contingent upon the total gross written premium generated by NMSIS for the year ending 31 December 2026.
NMSIS will also declare a pre-acquisition dividend of R59 million for assets held in excess of the minimum solvency capital requirement as of FY24.
The deal gives Sanlam an opportunity to further expand its insurance and financial services business across Africa, the companies said. Opportunities outside South Africa will be facilitated through its SanlamAllianz business.
MultiChoice has a subscriber base of 21 million households across 50 African countries, while Sanlam operates in 31 countries, including eight of the top ten largest African economies.