Alexander Forbes is selling its life insurance business to Sanlam.
The two companies published statements on Monday announcing that they have entered into an agreement that will see Sanlam acquire Alexander Forbes's group risk and retail life insurance businesses for R100 million.
The transaction is still subject to certain conditions and the approval of competition authorities. Alexander Forbes has been in the process of exiting the insurance space for some time.
It sold its short-term insurance business to Momentum Metropolitan holdings at the beginning of 2020. At the time, the company also said that it was looking to sell its life insurance operations too and focus on retirement administration and providing advice.
"This disposal is the final step in our move away from providing insurance underwriting and reaffirms Alexander Forbes' strength as a trusted adviser to our clients," said Alexander Forbes CEO, Dawie de Villiers.
He added that the disposal concludes the exit of its insurance businesses and will realise a lot of value for shareholder and clients while protecting the employees employed in that business.
"Sanlam understands the importance of delivering financial well-being, and I am confident that the clients and employees moving across in this process are in good hands," said De Villiers, who also joined Alexander Forbes from Sanlam.
Sanlam said this transaction will help it with its South African growth strategy by strengthening the insurer's position in the group risk and retail life insurance markets.
Alexander Forbes Life reported R966 million and R37 million in gross written premium for its group risk book and retail life book of business, respectively, in March 2021. It will add approximately 630 employers and 210 000 members to Sanlam's group risk business and another 3 700 policies to the retail book of Sanlam Life.
Sanlam said it plans to pay the purchase price from its existing cash resources. Sanlam will pay half of the price on the effective date of the transaction, and the other 50% will be paid in two equal payments 12 and 24 months after the acquisition.