Quanta rebrands after MMI acquisition in crowded short-term insurance space
The wholly-owned Namibian short-term insurer, Quanta Insurance, that was started by Justus Hausiku and Johan Barnard of which a substantial share was sold to MMI Holdings Namibia in August last year, will next week officially be rebranded to Momentum Short-term Insurance under the livery of its new control shareholder.
The decision to sell a substantial portion of Quanta Insurance to MMI Holdings Namibia came after lengthy negotiations that started in 2016 when MMI Namibia was investigating the opportunity to start a short-term operation in Namibia. The transaction was fast-tracked when it became clear that the capital requirement for a short-term operation will increase substantially with the implementation of the long awaited FIM Bill. For that reasons MMI Holdings Namibia invested N$8 million in the business to increase the solvency of the business and to enable management to grow the business.
The transaction will add to MMI Holdings Namibia goal of becoming a fully fledged financial service provider and the short-term insurer will likewise be branded Momentum Short-term Insurance. Before the deal, MMI Holdings Namibia did not have a presence in the short-term market despite extensive holdings in ancillary insurance providers.
In a presentation earlier this week to mark the launch of the rebranded entity, MMI Holdings Namibia said its existence is the result of the merger in 2013 between Metropolitan Life and Momentum Life Assurance.
Quanta Insurance, in turn, was founded by Hausiku and Barnard as the only locally-owned, general short-term insurance company in the local market. Barnard was confident about the prospects for a Namibian short-term insurer following his very successful introduction of Hollard Insurance in the local market, “but to become part of a much stronger and well-known brand was just too attractive especially against the background of a very competitive market, a struggling economy, the forthcoming implementation of a too complicated regulatory and reporting regime and an ever-changing and expensive technological environment,” he told the Economist while explaining the technicalities of short-term insurance.
Quanta faced many challenges and despite a lengthy delay in the approval of the license from the regulator, Quanta was growing and establishing a foothold in the short-term insurance market, driven by the expertise and experience of the management team in. “Quanta, through branches in Windhoek and Walvis Bay, offers a range of short-term solutions to the market across all sectors,” said Barnard.
MMI Namibia got the experienced team they were looking for to break into the local short-term market. Quanta’s shareholders, realising that it will be very difficult to stay competitive against local operators with South African parents with much larger balance sheets, agreed to the substantial buy-in by the Metropolitan Momentum complex.
The cost of re-insurance, for instance, was one aspect that forced Quanta to compete on a playing field that certainly was not level. Furthermore, the burden of regulatory compliance enforced by Namfisa, had become too complicated, very expensive and time consuming for a small, local short-term start-up. Quanta also realized that the digital world is changing at an astounding pace and that local resources are limited and that most initiatives are being developed abroad.
At the time of announcing the deal last year, Group CEO of MMI Holdings Namibia, Jason Nandago said “we are pleased to enter this agreement with Quanta Insurance, we share the same values and culture and we have been very impressed with Quanta Insurance’s strong management capability. Acquiring a 70% stake in an established short-term insurer gives MMI Holdings access to short-term insurance skills and experience and allows the group to diversify its portfolio. We will explore and maximise inherent synergies resulting in increased revenue to the benefit of stakeholders and the economy at large”.
Barnard commented then “The transaction is confirmation of the success and track record that Quanta garnered during the short time that we have been part of the Namibian Insurance landscape. The MMI group footprint will allow Quanta to spread its wings in terms of the offerings to the public via our trusted broker network. The capital injection that is part of this transaction will further solidify our balance sheet and allow Quanta to grow our market share. We are excited to explore this new venture and invite our brokers, clients and interested parties to join us in the journey ahead.”
This week, MMI announced that Barnard will continue to steer the new Momentum Short-term Insurance, assisted by his former Quanta management team.
MMI Holdings Namibia shareholding structure comprises Pinnacle/Metropolitan Empowerment Trust (0.7%), Metropolitan Staff Share Incentive Scheme (2.7%), MMI Holdings International (Pty) Ltd (87%), and Grenada Investments (Pty) Ltd (9.6%).
Sister companies in the MMI stable include wholly-owned subsidiaries, Metropolitan/Swabou, Momentum and Momentum Asset Management and the majority-owned entity, Methealth Namibia
MMI said the new Momentum Short-term Insure now forms part of a significantly stronger balance sheet, offering a strong and well-known brand. Access to capital is enhanced and there is much opportunity for cross-selling between the various subsidiaries. Momentum Short-term Insurance has access to international best practices, it can negotiate favourable re-insurance rates, and the group’s size relieves the burden of regulatory reporting and compliance.
“Finally, the deal gives Quanta access to new technology which will enable us to service a wider spectrum of clients, from the low-income end all the way to large corporates, like we are already doing,” said Barnard.