Capitec due to announce bancassurance JV with Sanlam

Capitec is expected to announce a bancassurance joint venture with Sanlam, alongside its financial results due Tuesday.

In presenting results for the 2017 financial year, Sanlam noted that a distribution partnership with Capitec formed part of its diversification strategy, which would “enhance resilience and earnings growth”.

Read: Sanlam’s $1 billion deal is largest African insurance transaction

In an interview with Moneyweb, Sanlam chief executive Ian Kirk said the joint venture would see Sanlam become an insurance partner to the banking group.

“We are delighted with the opportunity to partner with Capitec. We like the bank, we think they are quite innovative, they’ve grown well and they’ve identified the need to offer insurance and savings plans to their client base to broaden their offerings and to improve their positioning with their clients in South Africa.

“Capitec, correctly in my view, has realised that its business is banking [and] insurance is our business and a partnership is the right solution for its clients.”

The partnership is to provide Sanlam with an opportunity to grow its client base in the local entry-level market and earn an income off the products sold to Capitec clients, he said.

The offering is currently in pilot mode following a soft launch last November, with an official rollout expected in April or May this year.

Kirk would not be drawn into detail regarding the split of the joint venture partnership nor the type of products to be launched or the distribution model.

Rival groups MMI and African Bank last year entered into an exclusive rights agreement to sell their respective loan and insurance products to a combined client base. The joint venture, of which MMI owns 51% and African Bank 49%, has seen the insurer’s Metropolitan unit set up shop in 179 of the bank’s branches to date.

MMI’s financial results for the six months to December 2017 show that it has sold almost 6 000 policies equivalent to R17.7 million in annual premiums through the partnership, with 263 loans valued at R23 million extended through MMI Lending.

Read: MMI shares fall after suspending dividend

Capitec, currently in a closed period, is expected to announce details related to the joint venture alongside its financial results for the year ended February 28 2017.

The banking group, in a trading update, guided to an increase of between 16% and 19% in earnings per share and headline earnings per share.

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