Medical schemes announce plans to amalgamate

Two South African medical schemes, TeleMed and BESTmed, plan to amalgamate on 1 January 2010 following an agreement between the boards of trustees of both schemes. Sanlam Healthcare Management (SHM) - which currently administers the BESTmed scheme and is a full subsidiary of Sanlam Life - will administer the newly merged BESTmed scheme, and in the process will significantly grow its member base.

Dries la Grange and Leon la Grange, chief executives of BESTmed and TeleMed respectively, said that the decision had been taken in the best interests of the members of both schemes who will gain access to a bigger risk pool and wider client service network. "South Africa's medical scheme industry has undergone significant changes not least of which is the setting up of GEMS (Government Employees Medical Scheme). Amalgamation between schemes is key to ensuring sustained growth and competition in the industry," they added.

Bongani Mncwango, CEO of SHM says that as a relatively new player in this industry - Sanlam re-entered the medical scheme industry in 2008- the group had been actively looking for ways to increase its market share and the scope of its business. "This amalgamation will help us grow this portion of our offering to clients and is directly in line with Sanlam's group strategy of further growing into a diversified financial services group. SHM has already developed a reputation for service excellence and the combined scheme will allow us to offer increasingly competitive rates and increase our footprint both in South African and other African companies."

The amalgamated scheme will trade as BESTmed and the parties are subject to the following conditions before the amalgamation can come into force.

(i) Both Boards of Trustees and the Sanlam Healthcare Management Board must give their final approval for the proposed amalgamation;

(ii) Members of both TeleMed and BESTmed must approve the merger as required by their Schemes' rules and relevant legislation;

(iii) The Council of Medical Schemes (or the Registrar) as well as the Competitions Commission must approve the transaction.