What a lot I got

Channel Life takes a step towards becoming a top 10 player…

Channel Life - the PSG group subsidiary -has entered into a reinsurance agreement with the view to acquiring two books of business from Rentmeester, for an undisclosed amount.

Confirming the agreement, Channel Life CEO René Otto says that the deal has more than doubled the number of lives that are covered by the company, while premium income in the Channel Group Scheme business grows from R50m to R170m per annum.

The transaction involves a voluntary group scheme and a pensioners’ group scheme, both of which consist mostly of people in the C and D income groups.

“The transaction, which is effective from 1 May 2005, also means that our administrative platform business, Alfinanz, moves into the big league as it will administer the additional 350 000 new policies that the deal signifies. Alfinanz has effectively reached critical mass with this single transaction.”

“Last year we looked at acquiring the Rentmeester business, but we weren’t successful. With the take-over of the two books, however, we are more than satisfied, as the deal significantly improves the embedded value of the Channel Life business and provides us with the benefits of scale that we require to grow to the next level.

In terms of the support structure behind the two books, the systems will be transferred to Channel Life, while personnel remain under contract to the business. Otto also confirmed that there are no plans to move the operation from Pretoria.

“We plan to grow and enhance the books and create value for policy holders and shareholders alike. We will develop and expand the relationships that currently exist with intermediaries and administrators who are involved in the two books.”

Channel Life recently released their results, with headline earnings increasing to R39m, while gross premium income grew by 40%, the return on shareholders funds increased by 24% and the asset base increased to R2.1bn.