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Monday, June 1, 1992
Momentous grouping

In a somewhat complex deal Momentum Life announced on 7th May 1992 that it had formed a R10 billion group in a “link-up” with Rand Merchant Bank (RMB). It strengthens Momentum’s position as the fifth largest life assurer behind Old Mutual, Sanlam, Liberty Life and Southern Life.
According to sources, staff and investors in Momentum breathed a sigh of relief when it was revealed during April that the Sankorp plan to take over Momentum had been withdrawn. It left management free to negotiate what has turned out to be a “very amicable agreement.”
The complex deal has several stages. Effective 1st July 1992, Rand Merchant Bank Holdings (RMBH) will acquire 58,7% of Momentum Life on paying R180,8m to ABSA (30% stake) and Financial Securities Ltd (a Rembrandt company holding 28,7%). Stage two involves the purchase of RMB (a wholly-owned subsidiary of RMBH) by Momentum Life for a total of R385,6m (payable to RMBH) in the form R154,2m in cash plus the balance in 52,5m of new shares in Momentum (valued at some R231,3m). This will raise RMBH’s ownership of Momentum to 76,4% (some 93,6m ordinary shares in all).
It amounts to a reverse listing of RMB. The shareholding in RMBH remains the same: directors and management (47%), Sage 26%, ABSA 13% and minorities 14%. Note that ABSA also has stakes in Cusaf (the Commercial Union holding company) with 30%, FPS (49%) and Priceforbes Federale Volkskas (25%). There are big bank and other insurance broking connections too (See Insurance Times May 1992 pl3).
And that’s the picture so far.

However, it is likely that further restructuring will take place “in order to reflect the different business activities of the new group and to optimise synergistic benefits.”
Meanwhile, the remaining shareholders of Momentum Life, involving some 28,9m shares, have the option to sell their holdings to RMBH at R4,40 a share. The deal will result in the creation of a substantial financial services group with activities ranging from long-term assurance, merchant banking to asset management, which includes property and unit trust business.
RMB was incorporated as a public company in 1968. In 1979 a consortium headed by Johann Rupert acquired RMB, at which time it had total assets of R13,4m. In 1985 Rand Consolidated Investments was merged with RMB. Since then it has shown a compound growth in earnings of 31% per annum.
Momentum Life
This company has grown by successive mergers, a route along which many angels “fear to tread”. There’s no doubt, however, that the company has become the merger experts, making a success of this style of growth.
It was established in 1967 by the AVBOB Group, and was then known as Afrikaanse Verbond Lewens. In 1973 it merged with Monument Assurance and was renamed Momentum Life.
The company acquired the South African business of Yorkshire General in 1976 and, a few years later, Volkskas and Rembrandt each acquired 30% from AVBOB. In 1987 Momentum continued on the acquisition trail with the purchase of the life interests of Allianz Group, namely Allianz Life and Rand Life. These two companies were almost three times the size of Momentum.
In 1989 the company took over Lifegro, a listed assurer in which Volkskas, Rembrandt and Momentum itself had a controlling interest. That company was seven times the size of Momentum at the time. It was then delisted. Lifegro was previously known as Legal & General Volkskas, representing the South African life assurance interests of Legal & General of the UK.
Many years ago Momentum, AVBOB and Volkskas Bank also had controlling interests in a short term insurance company, Maritime & General. Jouke Wingerden was then both MD of Momentum Life and Maritime & General. In 1986, Aegis took over Maritime and, says Brian Seach, present MD of Aegis, “the licence was forfeited as part of the deal.” Out of this arose Momentum’s present 10% stake in Aegis Insurance.
Comments MD of Momentum, Neil Krige, “We now have a very cordial relationship with Aegis. We sell their medical products, for example, and manage part of their pension fund.”
In 1989 Momentum was listed after the shareholding of the Allianz Group in Momentum was repurchased. The company now employs almost 1 400 people, plus 221 marketing consultants and is represented by 30 broker branches and 30 direct sales branches countrywide.
As at 31st March 1992 it held total assets of R7 800m, plus a further R1 400m administered on behalf of clients. Premium income currently exceeds R1 billion a year and investment income over R550m.

Copyright © Insurance Times and Investments® Vol:5.6 1st June, 1992
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