Sanlam & Santam strike deal on emerging markets

The Transaction positions SEM as a single investor for the Sanlam Group's short-term insurance businesses in emerging markets whilst enabling Santam to share in the economic interest of the current and future short-term insurance expansion in these markets. In principle, SEM and Santam will respectively participate on a 65%:35% basis in the Sanlam Group's short-term insurance businesses in emerging markets. Through its participation in the Sanlam Group's emerging market short-term insurance investments, Santam will obtain exposure to the Indian, Malaysian and African emerging markets, and have the opportunity to participate in the Sanlam Group's future emerging markets short-term insurance investments.

In terms of the Transaction, Sanlam will participate in Santam's investment in Santam Namibia Limited ("Santam Namibia").

In addition to these transactions, SEM has acquired Santam's 25.1% investment in the issued ordinary shares of NICO Holdings Limited incorporated in Malawi. NICO Holdings is the holding company of NICO's short-term and life insurance businesses across various countries.

In terms of the Transaction Santam will pay a net amount of R167.7 million to SEM.

SEM's existing footprint and the combination of Sanlam's established governance, scouting and country expertise together with Santam's technical expertise should enhance the value of the emerging market businesses for both parties.

Says Sanlam Group's Chief Executive, Dr Johan van Zyl: "The transaction is in line with our strategy to diversify both geographically and into broader financial services and is a logical next step in our growth strategy. We continue to endeavour to keep the business on a strategically sound footing for the future and we believe this transaction will sustain our efforts to grow value for our shareholders and bolster our position in the market."

Commenting on the transaction, SEM's Chief Executive Officer, Mr Heinie Werth, said the combined expertise of Sanlam and Santam would enhance SEM's offering.

"We believe our collective years of experience and combined competitive product offering position us well to meet client needs across the markets in which we are currently doing business as well as in future markets"Werth said.

At the effective date Santam will subscribe for shares of separate classes in SEM with each separate class linked to one of the following participation interests:

A 15.4% participatory interest in Pacific & Orient Insurance Co. Berhad (P&O), incorporated in Malaysia. SEM acquired its stake in P&O in May 2013.

A 7% participatory interest in Shriram General Insurance Company Limited (SGIC), incorporated in India.

A 18.6% participatory interest in BIHL Insurance Company Limited (BIHL Sure), incorporated in Botswana; and

A 8.7% participatory interest in the short-term insurance subsidiaries of NICO Holdings in Malawi, Zambia, Tanzania and Uganda (collectively the "NICO subsidiaries"

Santam, through its wholly-owned subsidiary Santam Namibia Holdings (Proprietary) Limited (";Namibian HoldCo"), holds 60% of the issued ordinary shares of Santam Namibia. SEM will subscribe for shares in Namibian HoldCo linked to a 37.4% participatory interest in Santam Namibia.

Santam's Chief Executive Officer, Mr Ian Kirk, said: This transaction enables Santam to achieve its international investment objective through the economic participation in SEM's short-term insurance businesses and gives us access to SEM's growing footprint in some significant emerging markets and it will create value for our shareholders. We are confident that Santam's short-term insurance technical expertise will add value to SEM's growing footprint in emerging markets."