FAnews spoke to Rudi Schmidt, Group CEO of Assupol Holdings, about the company’s demutualisation and the impact thereof on Assupol, its intermediaries and policyholders, the insurance industry and the communities it operates in.
Assupol’s executive board realised that it would be in the best interest of the company, its policyholders and the industry if Assupol was demutualised, and as such the process started a number of years ago.
The company is financially sound, growing and delivering good sustainable profits, but three primary reasons provided impetus for the decision to demutualise.
“The first reason revolves around releasing value to our policyholders,” explains Rudi Schmidt, Group CEO of Assupol Holdings. “The company has been in existence for more than 90 years and over this period, significant value has been built, which policyholders are unable to access in a mutual. As an incorporated company, Assupol can give members access to this value, since members will receive shares which they will be able to trade in time.
“Secondly, the company is growing and management would like to be in a position to raise capital either by issuing new shares or raising debt to finance growth or to make strategic acquisitions. And thirdly, the demutualisation will prepare the company for a primary listing on the JSE.”
Impact on Assupol
Together with the demutualisation, Assupol was restructured into two focused businesses under a holding company.
“The restructured company allows for greater focus, a leverage of group muscle and improved efficiency which should lead to a greater value for all our shareholders,” says Schmidt. Bridget Mokwena has been appointed as the CEO of Assupol Life. “Having been at Assupol Life for over a decade now, Bridget brings a wealth of experience into the position. She is an energetic and visionary leader and we are confident that the Company will grow from strength to strength under her leadership.”
In terms of the Assupol brand, Schmidt believes that the only change will be the recognisability of the brand and the ownership by Assupol’s policyholders. “Our brand will remain synonymous with our markets, with values such as reliability and dependability and with our culture of excellent service.”
Impact on Assupol’s product offering
Schmidt adds that the demutualisation will not change the company’s product offering, but the products will continue to evolve as the market - and clients’ needs - change. “Innovation is key in providing sensible, suitable and affordable products to our clients. We have a sizeable client base and we will continue to find suitable products for their unique and specific needs. It is our policy to keep our products simple and accessible to all and Assupol Life’s 4Sure product is a case in point.
The 4Sure 100% Cashback Benefit forms part of Assupol’s Progress 4Sure Plan, a life policy whereby cover is provided in the case of death, physical disability or when a serious disease strikes. Importantly, the product does not require any form of medical testing and includes funeral cover for the proposer and spouse. The Progress 4Sure Plan is a 3-in-1 product; offering life cover (death benefit with optional disability and dread disease cover), funeral cover and cash back every 10 years if the policyholder has not claimed.
Impact on policyholders
From a policyholder’s perspective, nothing will change, confirms Schmidt. “The demutualisation will not adversely impact policyholders as policy rights are entrenched in the policy contract.
However, qualifying policyholders are eligible to receive free shares and become shareholders. The historic membership rights were converted into shareholder rights on demutualisation. Policyholders will be free to either trade their shares or hold on to them as investments.”
Broader industry impact
The greater benefit to the industry is that an additional listed insurance company will join the Johannesburg Securities Exchange (JSE) board, other than the existing major players. Schmidt believes that Assupol’s key focus on the lower income segment will create a new dynamic choice for investors.
Impact on society
In terms of the demutualisation scheme, Assupol will create a sizeable charitable trust with the aim of playing a part in uplifting the communities in which the company’s policyholders reside.
“We are really excited about this prospect,” says Schmidt. “Around 80% of our policyholders are previously disadvantaged people who will receive in excess of 400 million free shares. We believe this is significant and that the value transferred to our policyholders will make a meaningful difference in their lives. We have also created a share participation scheme for our staff with a bigger weighting given to previously disadvantaged staff. It is indeed exciting times for our staff - bringing added excitement into the company and aligning the interest of our staff with that of our shareholders.”
An exciting future ahead
Schmidt notes that the company is thrilled about the prospects for the future. “There are immense opportunities in the industry, particularly the sector of the market we are involved in. There are still many people who are uninsured, constituting a significant market for us to tap into. We believe that we can continue to grow our policyholders, profits and new business in the foreseeable future.”
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