Glenrand MIB sells underwriting interest for R61,92 million

Insurance broking and employee benefits group Glenrand MIB has announced the sale of its 60% holding in Holmwoods and Back and Manson (HBM) for R61,92 million.

The company has announced that it has reached an agreement whereby Innovation Group, a subsidiary company of London Stock Exchange-listed The Innovation Group plc, is to acquire the groups interest in HBM.

HBM is an investment holding company, with an investment in an underwriting management company specialising in medical related insurance administration. The underwriting management company held by HBM operates from Johannesburg, Cape Town and Durban and is focused on providing specialist skills on behalf of insurance companies and certain underwriters at Lloyd's of London.

Dudu Kunene, Chairman and Acting CEO of Glenrand MIB, says the sale follows a strategic decision by the group to return to its core insurance broking and employee benefits functions. "The nature of the underwriting agency and its client base requires access to various distribution channels and high tech information technology systems that are available in the international arena," he explains.

Kunene adds that the future marketing of clients' portfolios also needs a shareholder with ready access to an internationally represented organisation to facilitate the further growth and development of the business in the handling of existing business and sourcing of new opportunities.

'It is the considered view of the Glenrand MIB board of directors and management of the underwriting company that the inability to achieve the above two objectives would have held back the progress of the underwriting business in a more competitive global market environment. The business is well equipped in terms of intellectual capital and is likely to benefit substantially from the linkage to a global leader in the information technology business," says Kunene.

The R61,92 million in cash realised through the sale will be used to fund strategic acquisitions and expansions. 

With the disposal, which is effective retrospective to 1 October 2006, the company has ceased to trade under a cautionary announcement.