The Hollard 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 provider of intermediated corporate and commercial insurance products and services. It was set up by Hollard in 2007, which currently owns 40% of the business.
The combined entity would have a premium income from short-term insurance operations of over R10,6 billion for the year to 30th June 2012 (based on audited financials). The joint entity will comprise over 1 700 employees, including those housed at Etana branches and Hollard offices, all of which will remain in service.
Explains Nic Kohler, Hollard Group CEO, “Hollard and Etana have been built on the foundations of true partnership and a focus on crafting insurance solutions that provide the consumer with real value. By joining forces, we hope to 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.”
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.”
Although Hollard will acquire Etana, the proposed post-transaction structure will reflect a “best of both worlds” approach, with executives and teams from both companies enjoying expanded responsibilities in the joint entity. Says Kohler, “We believe that the new platform will create significant opportunity for growth, which is why there are important roles for the management of both teams. The complementary nature of our respective businesses means that we do not anticipate any job losses.”
In the six years since its formation in 2007, Etana has trebled the size of its business. “The acquisition of its 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 it an attractive addition to our insurance business.”
Cavalieri says, “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 growth path. By teaming up with Hollard we are able to leverage the strengths of both groups to create a 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. Both 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, for example.
“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.
The transaction is 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 being a part of the Hollard Group again. 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.”