South Africa-based insurance group Metropolitan & Momentum International (MMI Holdings) acquired a 75 per cent stake in Cannon Assurance, converting it into a subsidiary that will be integrated into the multinational’s operations spanning 14 markets.
The stake is revealed in MMI Holdings’ 2014 annual report which disclosed further details of the acquisition that was concluded late last year.
“This business acquired a 75 per cent share in Cannon Assurance in Kenya after year-end,” the firm said in its annual report for the year ended June 2014.
Shareholders of Cannon have also taken a minority stake in MMI’s local subsidiary, Metropolitan Life Kenya, as part of the cash-and-stock transaction but their exact ownership is yet to be reported by the multinational.
MMI’s equity in Metropolitan stood at 96 per cent in June last year and was unchanged from the previous year.
The acquisition of Cannon was completed around September last year, paving the way for the multinational to allocate the minority stake in Metropolitan to Cannon shareholders from then on.
Cannon investors also received R300 million (Sh2.4 billion), benefitting from the multinational’s decision to spend up to R500 million (Sh4 billion) to expanding in Africa.
MMI is betting on the acquisition to grow its presence in the East African market where the low uptake of insurance –at less than five per cent— is seen providing future growth opportunities.
Cannon and Metropolitan currently operate only in Kenya but the multinational plans to use the twin subsidiaries to expand in the region in the medium term.
“The acquisition … represents an important milestone to fast track MMI’s growth strategy in Africa and strengthens MMI’s presence in East Africa,” the multinational said in a statement.
Metropolitan only offers life insurance while Cannon, which has five branches in Kenya, is a composite underwriter with a presence in general, life, and takaful (Islamic) insurance. Cannon’s covers include education, motor vehicle, workmen compensation and fire policies.
The acquisition has therefore expanded MMI’s presence in the local insurance market where Metropolitan has trailed its major competitors like Pan Africa Insurance in the life business.
Cannon’s net profit for 2013 dropped 6.7 per cent to Sh402.4 million compared to Sh431.5 million the previous year. Source: Business Daily Africa