Alexander Forbes to Soon Announce Sale of Its Insurance Unit

JOHANNESBURG (Capital Markets in Africa)  – Alexander Forbes Group Holdings Ltd. plans to announce the buyer and price of its short-term insurance business by the end of July as the South African retirement-services provider streamlines operations in a new strategic push.

“There was massive interest,” Chief Executive Officer Dawie de Villierssaid by phone Tuesday, declining to identify bidders. “We’re in the final stretch with the shortlisted candidates and are negotiating with them.”

The company is also exiting businesses in Uganda and Zambia, and planning to sell its group and retail life insurance units in the coming year, to focus on exiting sub-scale businesses, trimming costs and stimulating growth of new business. De Villiers is driving a new strategy after the group’s former head Andrew Darfoor was fired and several senior executives resigned late last year.

Plans to reset Alexander Forbes are being carried out as the South African economy and financial markets shrink. The company earlier on Tuesday reported a jump in full-year profit and paid out a special dividend to shareholders to become more “capital light,” the CEO said.

De Villiers on Alexander Forbes’ key challenges:

• “We’re in a precarious position where we need to invest in the business — in client-facing people, operational people to up the service levels a lot. At the same time we have a cost base that is very high so we will have to balance two and that will be quite a challenge in this environment.”
• “The economic environment was very tough, specifically in the areas that particularly effect our revenue like employmentlevels being at an ultimate low. The other was the markets which are down and deliver our asset-based results, which is half of our revenues.”
• The company’s “internal struggles” have been very unsettling for the business. Driving its new operational model and strategy in light of “change fatigue” among staff may be difficult.

Source: Bloomberg Business News