Santam, South Africa’s largest short-term insurer, has concluded agreements with Sanlam Life Insurance to buy 60% of the A1 ordinary shares in MultiChoice Group’s insurance business, NMS Insurance Services (NMSIS), for R925 million, with a potential deferred payment arrangement.
NMSIS is a micro-insurer and is licensed to underwrite general and life insurance products in South Africa. It has been underwriting insurance cover for the past 20 years under the DStv brand of MultiChoice, focusing on device, installation, funeral, subscription waiver, and debt waiver insurance products.
The deal forms part of the announcement by Sanlam in June that it had acquired a 60% shareholding in NMSIS for an initial upfront cash consideration of R1.2 billion, together with a potential earn-out payment of up to R1.5bn contingent upon the total gross written premium (GWP) generated by NMSIS for the year to the end of December 2026.
The NMSIS shares are comprised of two separate classes: ordinary shares, which entitle the holder to distributions related to the life insurance products, and the A1 ordinary shares, which entitle the holder to distributions related to general insurance products.
Santam will pay Sanlam Life the initial purchase consideration of R925m from its existing cash resources.
Santam’s potential contribution to R1.5bn the earn-out payment will be contingent upon the GWP relating to the general insurance products currently written by NMSIS for the year to the end of December 2026 exceeding the GWP projection included in the valuation. “The current general insurance book of NMSIS is mature, and it is expected that any earn-out payable by Santam will be limited,” Sanlam and Santam said in a joint SENS announcement on Thursday.
NMSIS has an insurance book of 3.3 million in-force policies on 31 March 2024, of which a significant portion relates to general insurance.
According to NMSIS’s audited financial statements for the year to the end of March, its GWP increased 36% year-on-year to R970m, profit after tax increased by 51% to R296m, and its net asset value was R277m.
The transaction enables Sanlam, through its fintech cluster, to advance its strategy of using technology to expand access to financial services across Africa, the joint SENS announcement said.
“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.”
Santam, a subsidiary of Sanlam, is best placed to drive the growth of the general insurance offering to the MultiChoice South Africa subscriber base, the announcement said.
Gloria Tapon Njamo, the chief executive of Santam’s Partner Solutions business, said the acquisition was an acceleration of the company’s strategy, which seeks to explore new market segments through partnering with other corporates.
“A key strategic pillar and growth vector for Santam is partnering with companies like MultiChoice, which presents us with a unique opportunity to create substantial mutual value. With a base of approximately eight million subscribers in South Africa, MultiChoice provides a robust and scalable channel for Santam to distribute tailored general insurance products,” said Tapon Njamo.
MultiChoice’s integrated payments platform has the potential to present a foundation for offering affordable value-added general insurance products to drive financial inclusion through the frictionless bundling of payments for services, she added.
The partnership will be limited to the South African client base.
