South Africa’s life insurance
industry marked another major step in its consolidation on 1
December 2010 with the listing on the Johannesburg Stock Exchange
of MMI Holdings.

MMI is the product of a
merger between two mid-size life insurers, Momentum and
Metropolitan, and creates the country’s third-largest life insurer
after Old Mutual and Sanlam.

Following the merger,
shareholders of banking group FirstRand, Momentum’s former parent
company, now own 59.3% of MMI and Metropolitan shareholders

Though dubbed a merger, it is
not one of exact equals with Momentum accounting for some 60% of
MMI’s embedded value of ZAR30bn ($4.4bn). Total assets under
management stand at ZAR400bn.

The merger is unlikely to be
one of the easiest to bed-down with Metropolitan’s roots firmly in
the lower-end of the life market and Momentum focused on
upper-income segments. Notably, MMI will retain the dual-brands
with Momentum retail and Metropolitan retail forming two of its six
business clusters and each with its own chief executive. The other
four clusters are investments, employee benefits, health and the
primarily African-focused international.

Also to be overcome are
administrative challenges, not the least being that Momentum’s head
office is in Johannesburg while Metropolitan’s is some 1,000 miles
away in Cape Town. Plans to cut costs by trimming the combined
staff complement of 15,000 by 1,000 have also been stymied by the
Competition Tribunal which has ruled that no job cuts may be made
during the first two years following the merger.

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By GlobalData

Despite challenges, MMI group
CEO Nicolaas Kruger presented an upbeat outlook following MMI’s

“I believe our African
footprint will offer us a wealth of exciting growth opportunities,”
said Kruger.

“Whereas Metropolitan has a well-established retail
presence in seven African countries, Momentum has built a health
and employee benefits presence in 11 African countries,” he added.
“This combination allows for collaboration that will create a
broader geographic presence, and provide a greater diversity of
products in these and other African countries.”