Sanlam pouring more money into Moroccan insurer despite already writing off billions

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Sanlam plans to spend R2 billion to acquire an additional stake in SAHAM Assurance Maroc. The insurer spent US$1.1 billion in 2018 buying the Saham Group. Photo: Shutterstock
Sanlam plans to spend R2 billion to acquire an additional stake in SAHAM Assurance Maroc. The insurer spent US$1.1 billion in 2018 buying the Saham Group. Photo: Shutterstock
  • Sanlam plans to spend R2 billion to acquire an additional stake in SAHAM Assurance Maroc.
  • The insurer spent US$1.1 billion in 2018 buying the Saham Group.
  • However, it wrote down R5.8 billion of its stake in Saham in 2020.

After a trying year that forced Sanlam to write down R5.8 billion of its stake in Saham, the insurer has decided to pour more money into the Moroccan general insurer.

The local life insurer already owns 100% of Saham, but now it wants to increase its stake in Saham Assurance Maroc to 84.5% from 61.7% it already held through Sanlam Emerging Markets (SEM).

Sanlam will pay 1.24 billion in Moroccan Dirhams – roughly R2 billion to acquire the additional stake, which will be funded using debt facilities.

Sanlam expects to finalise the acquisition by the end of the third quarter of 2021.

Sanlam spent $1.1 billion in 2018 to buy the Saham Group, which propelled the company to become Africa's largest insurer, with a presence in 44 countries.

But it almost looked like Sanlam ended with an egg in its face when critics and some shareholders started questing what they regarded as value destruction caused by the Morrocan deal when the Covid-19 pandemic struck.

The R5.8 billion impairment resulted from Sanlam writing off most of the premium it paid for synergies it had expected to realise from the acquisition.

Some shareholders not happy about write-downs 

Sanlam also impaired the Lebanon business's assets to zero after the 2020 blast. But these write-downs didn't sit well with some shareholders and analysts who questioned Sanlam CEO Paul Hanratty during the group's results presentation in March.

Hanratty, however, maintained Sanlam's confidence in Saham and its willingness to continue backing the Morrocan insurer, saying that the growth potential of that business put it on the path to become "a very big part" of Sanlam's future.  

So, when Sanlam announced the Saham Assurance Maroc acquisition on Monday, it said that it saw several strategic benefits of holding a bigger stake. These include deepening Sanlam's direct presence in north and Francophone west Africa, exploring broad partnerships, and bringing the group's Moroccan partner, Sanam, into the Sanlam Group.

"This transaction further enhances our long-standing commitment to the Moroccan market," said SEM CEO Heinie Werth.

"Morocco and the broader north and west Africa regions remain key markets for Sanlam, and this proposed transaction is in line with our African diversity strategy," he added.

Sanam Holdings - which has interests in many industries, including financial services - has been Sanlam's in-country partner since the group bought Saham. Sanlam is acquiring the additional Saham Assurance Maroc from that company and its chairperson, Saïd Alj.

Sanlam said Alj would continue to provide the company with strategic, economic, and commercial advice on matters related to its activities in Morocco for years to come.

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