Mutual & Federal, a thoroughly South African company, turns 180
Peter Todd, Managing Director of Mutual & Federal
March 14 is an important day in the history of Mutual & Federal, a member of the Old Mutual Group, and for the entire South African insurance industry. On that day, in 1831, the first indigenous South African insurance company was established in Cape Town. The driving force behind its formation was British-born Thomas Le Breton, who convinced prominent Cape Town citizens to invest in a new company, the South African Fire & Life Assurance Company.
The South African Fire & Life Assurance Company is one of the companies which forms part of the lineage of Mutual & Federal. March 14, 2011, thus marks the 180th year of continuous involvement from Mutual & Federal in the South African insurance market.
As Mutual & Federal celebrates its history and birthday, the company is also celebrating its latest financial results, announced recently. 2010 was a good year for the company, with profits up 27% and a strong underwriting performance.
“Mutual & Federal evolved out of mergers and acquisitions of a large number of insurance companies, many of which were, in their day, the world’s most famous insurance companies,” says Robert W Vivian, Professor of Finance & Insurance, School of Economic and Business Sciences, University of the Witwatersrand. “The head offices of most of these were not situated in South Africa.”
Professor Vivian outlines the history of Mutual & Federal as follows:
- The life operation of the SA Fire & Life was placed into run-off in 1881, but the company continued to trade with pride as South Africa’s first short-term insurer.
- The SA Fire & Life company was acquired in April 1894 by one of the great Victorian insurers, the London & Lancashire Fire Company, but continued to trade under its own name.
- At the time of the takeover, Robert Brydone was a member of the South African Board of Directors of the London & Lancashire. He left shortly thereafter to form another South African insurance company, this time in the Transvaal, the Federal Insurance Corporation. In 1911, Brydone returned to the fold and sold the Federal to London & Lancashire, with the Federal continuing to trade under its own name into the late 1960s.The London & Lancashire was eventually taken over by the Royal Insurance Group in the UK, becoming part of the Royal Group.
- In the 1960s South Africa had become a republic and the government made it clear it was unhappy with foreign insurance companies operating in South Africa via branches.It indicated that all branches should be registered as South African companies and trade on the Johannesburg Stock Exchange. This conversion became known as the ‘domestication of foreign companies’.
- As a result, the Royal’s many companies in South Africa therefore merged with Old Mutual’s short-term company, the SA Mutual Fire & General Insurance company, in 1970.
- However, in order to be known as an overtly South African insurance company, a suitable name was needed. The Mutual part was easy, reflecting the Old Mutual’s involvement (The Old Mutual was established in South Africa in 1845). As the names ‘Royal’ or ‘London’ would reflect a British heritage, it was then decided to use the name ‘Federal’, from the Federal Insurance Corporation. And so the Mutual & Federal Insurance Company was born and the rest they say –is history.
“Poised to improve performance even further in 2011, Mutual & Federal can look back on a proud history, being part of the start of the local South African insurance market,” says Peter Todd, Managing Director of Mutual & Federal. “We will continue to lead the short-term insurance sector, embracing innovation and providing value to all our customers. We are certainly looking forward to another 180 years.”
