Two South African Insurance Giants Ready to Merge

Momentum Group unit and Metropolitan Holdings to merge This news comes from FirstRand.

Two of South Africa's largest insurance groups are ready to merge, according to FirstRand Ltd.

The financial service giant's Momentum Group unit will be merging with Metropolitan Holdings, to create a super power of insurance products.

FirstRand said that the two were ready to move after they reviewed each other's accounts.

The new entity will be known as MMI Holdings and will be headed by current Momentum Chief Executive Officer, Nicolaas Kruger.

FirstRand made this statement to the Johannesburg stock exchange this week.

The merged entity will become the third largest listed insurance group in the country and will be worth over R30 billion.

The final merger is subject to a vote put to Metropolitan investors in September, although it practically a given fact that they will vote in favour.

After the merger, FirstRand will own 59.3% of MMI, while Metropolitan investors will own 40.7%.

FirstRand founder, Laurie Dippenaar will act as chairman of the MMI Holdings for its first year, with JJ Njeke as deputy.

FirstRand's announcement came a full three months after the two sides completed a due diligence agreement for the creation of the the group.

Analysts believe that the final implementation of the merger was delayed due to ongoing negotiations relating to job losses and leadership issues.

"I think the whole thing is about who will run the show," said one analyst.

"Usually when a merger like this happens, there are job losses," said another. "I think these companies are discussing that."