Assupol Life of South Africa Plans to Demutualize, IPO

Assupol Life, a South African life insurer, plans to issue shares to the public after distributing stock to qualifying policyholders and some staff through a demutualization that may help raise funds for expansion.

“Our intention is to list in 18 to 24 months’ time, after the demutualization,” Rudi Schmidt, group chief executive of Assupol, said in a telephone interview from Pretoria today, adding that any capital raised may be spent on buying distribution channels for Assupol’s products. Assupol has not yet chosen advisers for its listing, Schmidt said.

“We’ll be giving just over 400 million free shares to qualifying policyholders and staff in the demutualization,” he said. “The problem is that not all of them will be long-term shareholders and may want the cash, so we’ve created a mechanism for the conversion.”

South Africa’s two largest insurance companies, Old Mutual Plc and Sanlam Ltd., demutualized more than 10 years ago. Since listing in Johannesburg and London in 1999, Old Mutual’s share price has risen 18 percent while Sanlam’s stock since late 1998 has more than quadrupled. MMI Holdings, a 30 billion-rand ($4.3 billion) company created from the merger of FirstRand Ltd.’s insurance unit, Momentum, and Metropolitan Holdings Ltd., will be the third-biggest listed insurer when that transaction is completed in December.


“We don’t see that as a threat to our business,” said Schmidt, who has served on Assupol’s board since 2000. “It’s part of the normal competitive environment and mergers are hard to bed down, which gives us opportunities.”

Assupol, formed in 1913 and which targets low- to middle-income earners, said its application for demutualization will be heard in the North Gauteng High Court of South Africa on Dec. 9, according to an e-mailed statement today. The insurer offers life cover, funeral cover, investment products and retirement annuities. In its fiscal year from 2007 to 2008, Assupol’s revenue fell 14 percent and group operating profit dropped to 137 million rand, according to the company’s website. It didn’t provide further details.

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