(Adds details, quotes, shares)
JOHANNESBURG, July 25 (Reuters) - South African insurer Momentum Metropolitan Holdings MTMJ.J is to acquire the short-term insurance business of financial services group Alexander Forbes AFHJ.J for around 1.94 billion rand ($139 million), the two companies said on Thursday.
Momentum Metropolitan, which recently changed its name from MMI Holdings, said the unit had identified short-term insurance as an area where it wanted to invest for growth, a view that had been strengthened by a strong performance in its existing short-term insurance business in recent years.
"This transaction accelerates and broadens the sustainable growth plans for this market segment," it said in a stock exchange announcement, adding the Alexander Forbes' unit had a strong management team and was a good cultural fit.
Shares in both Alexander Forbes and Momentum went into reverse following the news, however. Alexander Forbes' shares were up 0.72% at 1328 GMT, when they had previously been higher, while Momentum's were down 0.72%.
This was despite Alexander Forbes stating that it would return excess capital arising from the disposal, which is in line with company's capital-light strategy and announced in March, to shareholders.
"The transaction consideration reflects the quality of the business and the value that Momentum Metropolitan places on the clients, employees and management team," Chief Executive Dawie de Villiers said in a statement.
Momentum said the ultimate aim was to integrate the purchased unit into its current short-term insurance business, and for them to trade under one brand and with one licence. The companies expect the transaction to close before the end of the year.
($1 = 13.9894 rand)
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.