AFI Namibia, which offers personal and commercial lines insurance in Namibia, is owned by an indirect subsidiary of South African pension fund administrator Alexander Forbes

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AFI Namibia to be acquired by MSTI Namibia. (Credit: Tumisu from Pixabay)

Momentum Short Term Insurance Namibia (MSTI Namibia) has agreed to acquire Alexander Forbes Insurance Company Namibia (AFI Namibia) from Alexander Forbes Namibia (AF Namibia) for NAD50m ($3.36m).

AFI Namibia, which offers personal and commercial lines insurance, is claimed to be the fourth largest insurance provider in Namibia, on the basis of market share of gross written premium.

Its parent firm AF Namibia is a 75% indirect subsidiary of South African pension fund administrator Alexander Forbes. The remaining 25% in the company is held by Cherish Investments Proprietary.

MSTI Namibia, on the other hand, is owned 70% by Momentum Metropolitan Namibia and 30% by Namibian investment company Quanta. Momentum Metropolitan Namibia is owned 99.28% by Metropolitan International, a fully-owned subsidiary of South African financial services group Momentum Metropolitan.

Why Momentum Metropolitan’s subsidiary is acquiring AFI Namibia

The financial services group announced the acquisition of Alexander Forbes’ short-term insurance business in South Africa in July 2019 for a sum of for ZAR1.94bn ($104m). The acquisition was carried out through its subsidiary Momentum Metropolitan Strategic Investments Proprietary.

Following the 2019 transaction, Momentum Metropolitan concluded that the group and MSTI Namibia can achieve further commercial synergies by acquiring AFI Namibia as well.

Alexander Forbes said the proposed sale of its Namibian short-term insurance business is in line with its previously announced intention to offload its insurance cluster. The South African pension fund administrator said that the offloading of AFI Namibia further delivers on the execution of its advice-led and capital-light strategy.

The Namibian insurance business was classified as a discontinued operation in Alexander Forbes’ financial statements for the year ended 31 March 2019. AFI Namibia’s net asset value, as of 31 March 2019, was ZAR67m ($3.59m).

The proposed deal is likely to be closed by the end of August 2020, subject to approval from the Namibian competition authorities, other regulatory approvals, and meeting of other conditions.