MASERU — Insurance firms Metropolitan Holdings and Momentum have announced a proposed merger in an effort to improve competitiveness and consolidate their grip on the African market.
Metropolitan Holdings has a 100 percent shareholding in local operator Metropolitan Lesotho.
At a press conference held in Maseru on Tuesday, Metropolitan Lesotho managing director Nkau Matete said the merger will increase product offerings for customers and access to new markets.
“It is proposed that Momentum be unbundled from the FirstRand Group and a merged entity formed with Metropolitan.
“Together Metropolitan and Momentum will form a major new South African-listed financial services group, a leading and highly competitive provider of financial risk, investment and administrative solutions with a primary focus on Africa,” Matete said.
He said the merger will likely create the region’s leading financial services group.
“It will significantly expand each of Metropolitan and Momentum’s product offerings, target markets and growth prospects in life assurance, health asset management and employee benefits both regionally and elsewhere in Africa.”
Matete said “Metropolitan did not have any affiliation with a bank making it almost impossible to compete with the bigger competitors”.
He said from the third quarter this year clients from both companies will be offered more product offerings which are suitable for their income groups.
“Locally our main target market is in the lower to middle income groups, so clients in the higher income groups did not have products that suited them,” Matete said.
Metropolitan Lesotho is much bigger in Lesotho than Momentum so the merger will result in both companies operating under the Metropolitan banner from the third quarter this year, he said.
“Our clientele in the upper class will now have more access to high-value products which we did not provide. Likewise our merging partners will also have access to the middle and lower income groups,” Matete said.
The middle income group according to their classification is those earning above M8 000 per month, while the higher income group comprises of those earning above M10 000 per month.
However, the proposed merger is still subject to approval by shareholders of the parent companies Metropolitan and FirstRand which owns Momentum in South Africa.
“In the case of Metropolitan Lesotho the merger with Momentum Lesotho will be approved by the insurance regulator which is the Central Bank of Lesotho,” Matete said.
He said the two companies will continue to operate as separate entities and independently until the deal is finalised.
Matete said the spectrum will change as they will now be able to cover from the low to the high market that is currently being served by Momentum Lesotho.
The move might also result in more cooperation between First National Bank Lesotho and the two merged companies, he said.
“Banks are important to the insurance companies as the market for insurance turns to stop increasing when it reaches a certain level,” he added.
He said cooperation between banks and insurance companies is important since this gives insurance companies access to new markets.
He added that Metropolitan Lesotho remains “very profitable”.
Metropolitan has about 80 000 policy holders and is the biggest service provider in the life insurance market with market coverage of between 85 and 88 percent.
Matete said the two companies will fight to ensure that jobs are not lost when the merger goes through.