Short-term insurer King Price has set the table for an entry into the South African life insurance market with the announcement this week that it has made a bid to acquire life insurer Stangen from JSE-listed African Phoenix Investment.
If successful, the acquisition will allow King Price to enter the local life insurance market with an established brand, said chief executive Gideon Galloway. King Price, which was founded 7 years ago, sells about 12,000 policies a month and, at the end of its 2019 financial year in June, will see annual premiums of R1.7 billion.
Phoenix announced its intention to dispose of Stangen as part of a revised strategic approach. Several potential bidders have expressed their interest in Stangen, which has repositioned itself strongly in the local life insurance market in recent years, but King Price believes it’s ‘a better fit’ because of its similar business model and challenger approach.
“Stangen is a great fit for King Price. We believe that the acquisition of an existing niche life insurance business will provide numerous benefits, starting with reducing the amount of time and funding needed to establish a life insurance business from scratch. The Stangen management team has proven resilient in a tough market and we would welcome the opportunity to work with them to launch a King Price life insurance proposition,” said Galloway.
Stangen, which was originally established in 1948, has made substantial investments in new systems and operational capabilities over the last 3 years. Managing director Marius Botha said the company is looking to partner with a new strategic shareholder that supports its vision of changing the financial behaviour of ordinary South Africans.
“We’re grateful for the support we’ve received from Phoenix in recent years but, given the changing landscape of financial services in South Africa, we believe it’s time to partner with a culture-driven company that’s known for its innovation and customer-first approach,” said Botha.
King Price entered the highly-competitive South African insurance market in June 2012 with a world-first customer-centric insurance model that automatically decreases comprehensive car premiums monthly in line with the cars’ depreciating values. Since then, the insurer has expanded its personal lines products, launched successful business and specialised insurance divisions, and built a thriving business in Namibia.
Galloway says that 1 of the company’s key differentiators has been its use of data analytics and technology to streamline its processes and deliver better service and prices to its clients. This technology would transform the Stangen life insurance book and open significant growth opportunities, he said.