The big blue life insurer, Sanlam, significantly boosted its footprint last week with two acquisitions for a combined R1.1-billion. The first transaction sees Sanlam increasing its 62% shareholding in BrightRock to 100%. BrightRock will continue to operate as a separate entity under its own brand and its distinct needs-matched offering. The entrepreneurial management team who founded the company will remain with the business. 

Commenting on the BrightRock transaction, Sanlam retail affluent chief executive Anton Gildenhuys says the two companies’ offerings combined have the largest market share of new retail risk sales in the independent broker market, as per the latest NMG market share survey. 

“We are pleased to have contributed to BrightRock’s success since becoming a shareholder in 2017 and we now believe the opportunity is right to realise future growth prospects through owning 100% of the business. This is in line with our strategy and reflects our ongoing commitment to invest and strengthen our market position in South Africa for the benefit of our stakeholders,” he says.

Schalk Malan, chief executive of BrightRock, says there has been great synergy since Sanlam joined the BrightRock board in 2018 as a majority shareholder. “Sanlam has been very supportive of our management team to date. A big part of the way forward will be to continue with initiatives such as our rugby sponsorships, the BrightRock change agents’ stories on our website and our path of product innovation.”

BrightRock disrupted the life insurance industry as far back as 2011, with needs-matched life insurance, allowing policyholders to adapt their life cover as their needs change. By October 2022 the company had paid out more than R4.3-billion in claims, with R706-million paid out in the first seven months of that year alone.

Malan says the new structure with Sanlam as a 100% owner will accelerate product innovation. “In the last year we’ve expanded our rugby sponsorship to both the Stormers and the Bulls, which we have seen add value in terms of raising brand recognition. Operating in a risk space, the new ownership structure with Sanlam will allow us to tap into their existing infrastructure and really focus on research and development.”

Stronger fiduciary business with Capital Legacy

In the second transaction, the fiduciary operations of Sanlam Trust will combine with Capital Legacy to create a fiduciary business with a life insurance offering, which addresses a “clear need of indemnifying clients against executor and ancillary expenses”. 

Currently, the maximum tariff (excluding VAT) for executor fees is 3.5% on the gross value of the estate assets, including on the gross value of a community of property estate (excluding life insurance policies and retirement fund benefits payable directly to beneficiaries), and 6% of all incomes such as rentals, interest and dividends, which the executor collects on behalf of the estate from the date of the testator’s death to the date of final distribution of the estate.

Capital Legacy will buy 100% of Sanlam Trust to create an enlarged Capital Legacy business that includes Sanlam Trust. Sanlam Private Wealth Fiduciary Services and Sanlam Corporate’s Beneficiary Fund are not part of the proposed transaction and will remain with Sanlam.

Sanlam will take a strategic shareholding in the enlarged Capital Legacy (that includes Sanlam Trust) by subscribing for a 26% stake in Capital Legacy. The management owners of Capital Legacy will remain shareholders and continue to run the combined business together with the Sanlam Trust management team.

Gildenhuys points out that proper estate planning and drawing up a will are key components in financial planning. “The innovative solutions that Capital Legacy has created, the agile and best-in-class technology as well as the comprehensive marketing infrastructure they have built, all support their phenomenal growth. Combining the market-leading capabilities in Sanlam Trust with those at Capital Legacy will create a brilliant organisation that will be able to support all current and future clients in their endeavours to live with confidence.”

Both transactions are subject to regulatory approvals and Sanlam expects they will be finalised in the third quarter of this year. BM/DM