We are pleased to inform you that Hollard and Etana shareholders and management have agreed terms for Hollard to acquire Etana. While the transaction is subject to regulatory and Competition Commission approval, we believe that it represents great news for brokers, clients, Hollard and Etana team members and of course, all of our partners and suppliers.
As you are aware we place most of our Commercial clients covers with Etana Insurance and all of our Personal & Fleet covers with Hollard Insurance and we feel that this “merger” will be beneficial to all our clients. It will harness the specialized expertise from each insurer into a single stronger insurer.
To find out why and to put you fully in the picture, see the official press release below.
Hollard and Etana: Doing things differently - Again
"The Hollard Group, South Africa’s best-known independent insurance group, is to acquire the business and all remaining shareholding interests in Etana Insurance. The proposed transaction is subject to regulatory and Competition Commission approval.
Etana is a leading provider of intermediated corporate and commercial insurance products and services and has enjoyed tremendous market success and broker acclaim since being spun out of Hollard in 2007. The Hollard Group currently has a 40% shareholding in Etana.
The combined entity would be a major force in the South African insurance sector, with premium income from short-term insurance operations of over R10.6 billion in the year to 30 June 2012 (based on audited financials). The joined entity will comprise over 1,700 South African employees, including those housed at Etana branches and Hollard offices, all of which will remain in service.
In typical Hollard and Etana fashion, the proposed transaction is a little different from the norm. “This is not just for the sake of being different”, says Nic Kohler, Hollard Group CEO, “but because we think we can make a real difference in a fiercely competitive market”.
Elaborating further, Kohler says “Hollard and Etana have both been built on the foundations of true partnership AND a focus on crafting insurance solutions that provide the end consumer with real value. By joining forces, we will create greater choice and enhance innovation in commercial and corporate insurance. This will allow brokers to offer market-leading innovations and risk management practices to their clients. Of course, we will also improve utilisation of shareholder capital and increase capacity and that will ultimately benefit consumers.”
While Hollard is regarded by consumers and peers alike as being one of the most innovative insurers in South Africa, the spirit of innovation is also alive and well at Etana. Paolo Cavalieri, Chairman of Etana, says “I think we have been successful in driving real change in corporate and commercial product lines – our Risk Improvement Advanced Risk Questionnaire is a case in point. I strongly believe that our combined sense of adventure will result in huge advances for clients and brokers alike.”
But how does the transaction differ from run-of-the-mill acquisitions in the financial services space?
Firstly, although Hollard will acquire Etana, the proposed post-transaction structure clearly reflects a “best of both worlds” approach, with executives and teams from both companies enjoying expanded responsibilities in the joined entity. Says Kohler, “We believe that the new platform creates significant opportunity for growth, which is why there are important roles for the management of both teams in the new entity. In addition, the complementary nature of our respective businesses means that we do not anticipate any job losses, which is really important to us in the way we approach business”.
Secondly, this is hardly an acquisition of a company in trouble. In the six years since its formation in 2007, Etana has trebled the size of its business, a truly astonishing achievement in a highly competitive environment. “The acquisition of the Etana business represents the ideal way for Hollard to achieve our strategic goal of building a more substantial and unfragmented presence in the commercial and corporate market. Etana’s success in achieving significant growth whilst maintaining attractive margins in a challenging environment is what makes them an attractive addition to our, and indeed any, insurance business”.
Cavalieri agrees “We responded favourably to Hollard’s approach because it’s a natural fit and because it provides us with a way of continuing along our exciting growth path. By teaming up with Hollard we are able to leverage the strengths of both groups to create an even more compelling proposition for brokers and clients.”
There is also a good alignment of culture, which means that the joint entity is unlikely to skip a beat in terms of market-facing activities. For example, both companies have always viewed themselves as challengers to more traditional rivals, and both recognise the importance of not taking themselves too seriously, while taking what they do extremely seriously. Kohler says, "Our joint history, strong cultural alignment and forward-looking new management structure will provide continuity and will enable us to deliver benefits to the market very quickly. Our unique approach to this transaction will negate the ‘eyes off the ball’ problem that often bedevils acquisitions.”
There is also real alignment in how both companies really embrace brokers. The companies have been acknowledged over the years for their service to the broker fraternity, having won multiple categories at the annual Financial Intermediaries Association Awards, an insurance industry event that rewards insurers based on a survey of more than 2000 financial intermediaries across the country. “For us, these awards have always provided an important insight into just how we are performing in the eyes of the broking community and will continue to be an important benchmark going forward” agree Cavalieri and Kohler.
Lastly, the transaction is also unique in that the respective heads of the two companies have worked together previously. Paolo Cavalieri was CEO at Hollard before he became the chairman at Etana and says that he is looking forward to once again being a part of the Hollard Group. Cavalieri will head up a new business within the expanded Hollard Group, focusing on corporate and commercial business sourced exclusively through brokers. "Because of our history, we know and respect the Hollard environment and team. Those of us who have been with Etana since the outset are all really looking forward to working with Nic and the Hollard team again”, says Cavalieri.
Kohler concludes, "We see this as an important strategic move, a great opportunity for Hollardites and Etanans and our respective partners, and most importantly a really exciting development for consumers and brokers".
For further information contact
Warwick Bloom
GM: Hollard Marketing
011 351 5175
warwickb@hollard.co.za"