Merger creates third-largest insurer in South Africa

A merger between two of South Africa’s
mid-size life insurers, Momentum and Metropolitan, is set to create
the country’s third-largest life insurer and end banking group
FirstRand’s direct involvement in insurance.

Under the proposed deal, FirstRand will sell
its stake in its wholly-owned unit Momentum to Metropolitan which
in turn will issue new shares to FirstRand.

The banking group will then own about 60% of
the merged entity in which it intends to retain a stake of more
than 25% with the balance to be distributed to FirstRand
shareholders  

The merger brings together two very different
companies. Metropolitan operates mainly in the low- to
middle-income retail market, while Momentum focuses primarily in
the upper-income retail market.

Momentum is the larger of the two in terms of
embedded value, which is reported at ZAR18bn ($2.5bn), while
Metroplitan’s stands at ZAR12bn.

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