MMI Holdings yesterday said the conclusion of a black empowerment deal with Kagiso Tiso Holdings (KTH) was another building block for the group in cementing itself as SA's third-largest insurer by embedded value.
The deal would benefit MMI, which group CEO Nicolaas Kruger confirmed was angling for more business from the government, particularly from public servants and parastatals, where it is expanding its health and employee benefits business.
Mr Kruger also said MMI had achieved "a solid empowerment foundation" that would help it to become a leader in meeting the financial services needs across all its customer segments.
It also follows a flurry of corporate activity by the JSE-listed firm after its announcement of an investment in a short-term insurance venture this month and a controlling interest in property group Eris in May. Thus MMI has begun to strategically reduce its discretionary capital, which amounted to about R4bn as of December last year.
MMI - which operates in 12 countries in sub-Saharan Africa and is also eyeing India's insurance sector - yesterday said it had extended its economic empowerment deal with KTH, which now had an effective 7% stake in the group. KTH is the investment company formed when Kagiso Trust Investments (KTI) and the Tiso Group merged last year.
KTI was the black economic empowerment partner of Metropolitan, in which it had acquired a 10% stake in 2004.
That stake was subsequently increased to more than 20% between 2005 and 2007, only to be diluted to just more than 8% when Metropolitan merged with rival Momentum to form MMI Holdings more than a year ago.
MMI said in a statement KTH would convert 66-million MMI preference shares into listed MMI ordinary shares, and MMI would extend the term of the remaining MMI 34-million preference shares for five years. "This will result in KTH having a shareholding of 7% in MMI," it said.
Mr Kruger said the success of the former partnership with Metropolitan had persuaded MMI shareholders that there was no use going back to the drawing board to select another empowerment partner. This was confirmed by MMI shareholders, who yesterday approved the extension of the partnership, which was due to end this year.
Mr Kruger said KTH, whose CEO, Vuyisa Nkonyeni, would become a nonexecutive board member of MMI, was also the right partner for MMI's goal of pursuing both organic and acquisitive growth in Africa, where it was focusing on growth markets such as Namibia. MMI was also keen to expand outside sub-Saharan Africa and had initially settled on the Indian market, where rivals Sanlam and Old Mutual already have operations.