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South Africa: Imperial Weighs Insurance Units Merger
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Business Day (Johannesburg)
13 May 2008
Posted to the web 13 May 2008
Regis Nyamakanga
Johannesburg
INVESTMENT holdings group Imperial is considering merging its Regent Life and Regent Insurance companies to enhance operational synergies, the company said yesterday.
The diversified group, which recently announced a raft of cost-cutting measures including company closures and disposals, said it would consult to assess the viability and risks of the potential merger.
Imperial, which posted a 25% loss in headline earnings for the year to December, in March sold 65% of Imperial Re to Flagstone Re of Bermuda in a deal that CEO Hubert Brody said would create a reinsurance company with R220m in equity.
Brody said that the sale would also free up R80m of capital for Imperial Holdings and unlock Imperial Re's "potential throughout sub- Saharan Africa". The deal is still subject to regulatory consent.
"Imperial Holdings' strategy will continue its focus on core businesses in which we have significant market leading positions, which will serve as a platform for future value creation and growth," he said.
"This includes refocusing the company on logistics, car rental and related tourism services and on integrated motor vehicle importation, retailing and related financial services."
The company said yesterday the merger of its insurance units would enhance the growth prospects and operational synergies of Imperial Re and Regency Insurance through shared marketing, cost savings and more effective risk management and compliance.
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On February 27, Imperial said it was shutting its commercial vehicle distribution unit Commercial Vehicle Holdings and divesting from its aviation business after the group's profit plunged. Brody said the company would also unbundle its leasing and capital equipment unit Eqstra to "catalyse" growth and improve returns.
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