Sanlam is set to acquire a 60% majority stake in MultiChoice’s insurance division, NMS Insurance Services (NMSIS). The agreement, disclosed today, includes a long-term commercial partnership to extend insurance and financial services across MultiChoice’s African subscriber network.
NMSIS, a registered South African composite micro-insurer and authorised financial services provider, is licensed to underwrite non-life and life insurance products.
It has been writing insurance for the past 20 years under the DStv brand of MultiChoice, focusing on device, installation, funeral, subscription waiver, and debt waiver insurance products. Three years ago, it introduced life products.
The announcement comes shortly after recent reports detailing the difficulties confronting MultiChoice.
According to Daily Investor, MultiChoice – facing challenges from high inflation and currency impacts – reported a R4.1-billion loss for the year to the end of March 2024. The results showed that MultiChoice has become technically insolvent.
The online news platform attributed the disappointing results to a 9% drop in active subscribers, exacerbated by economic pressures in South Africa and the “Rest of Africa” segment.
According to a Sanlam press release, the financial services group will pay MultiChoice R1.2 billion upfront for a 60% stake, with the possibility of an additional payment of up to R1.5bnn based on the gross written premiums (GWP) generated by NMSIS by the end of 2026.
MultiChoice will utilise the cash proceeds received from the transaction “for working capital purposes”.
The press release states that Sanlam and its affiliates will offer financial products to MultiChoice’s subscriber base of 21 million households across 50 African countries. Sanlam intends to use MultiChoice’s communication channels and payment systems to provide these expanded services to MultiChoice’s subscribers.
Sanlam will oversee the NMSIS operations through its Sanlam Fintech cluster.
Opportunities outside of South Africa will be facilitated through SanlamAllianz.
Sanlam Group’ chief executive, Paul Hanratty, said: “It affords us the opportunity to leverage our respective market footprints and technological capabilities that will support growth and market penetration, as well as provide opportunities to realise synergies for the benefit of all stakeholders.”
MultiChoice’s chief executive, Calvo Mawela, described the collaboration with Sanlam as a major strategic move.
“It not only allows us to increase the value we provide to our subscribers, but also enables us to leverage Sanlam’s expertise to drive growth and innovation in our insurance offerings across the continent.”
NMSIS has increased its in-force policies by 19% to 3.3 million at the end of March. The life products now account for 30% of in-force policies.
NMSIS’s key financials for the year were as follows:
- GWP increased 36% year-on-year to R970 million;
- profit after tax increased 51% to R296m; and
- the net asset value of NMSIS was R277m.
The transaction is subject to the necessary regulatory approvals from the South African competition and regulatory authorities.
