Multi Billion Dollar Insurance Group Planned

April 2 - A new all-share deal between the South African groups Metropolitan and Momentum will result in the creation of the country's third largest insurance groups.

Metropolitan, considered the fifth largest insurer in South Africa, and the unlisted unit of FirstRand, Momentum, will enter a venture worth $4 billion, it was reported this week.

Analysts say that the market value of such a venture could reach R30 billion.

"On the face of it, it's a good deal," noted one analyst. "The two businesses complement each other very well. There will be lots of opportunities to cross sell within the new group."

The two groups target totally different socio-economic groups. While Momentum aims for upper-income retail customers, Metropolitan targets low to middle income markets in South Africa.

Of the two, Momentum is the larger group although for technical reasons, Metropolitan will be acquiring Momentum in the new deal.

However, said another analyst, "on a shareholder level, it looks like Momentum is taking Metropolitan."

The deal will work as follows:

• Metropolitan issues 950 m new shares to FirstRand.
• In exchange, FirstRand hands over Momentum.
• FirstRand passes its stake in Metropolitan to its shareholders.
• Shareholders will thus hold 60% of the combined insurance group.
• The other 40% of the shares will be held by current Met shareholders.

While both insurance groups are based in South Africa, their combined venture will see them leave a footprint in no less than twelve African countries.