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In the June edition of FAnews, Insure Group Managers’ curator, Pieter Bezuidenhout, sits down with FAnews to discuss the company’s curatorship and the journey forward.Towards the end of 2018, Insure Group Managers (Insure Group) was placed under curatorship by the Financial Sector Conduct Authority (FSCA).Seven months on, and Pieter Bezuidenhout, Insure Group Curator, told the FAnews that the Group has learned a lot during the curatorship process, and that there are some significant changes on the horizon.
It is key to point out that the regulator did not have concerns with Insure Group's whole business model but rather the type of investments that Insure Group was making during the prescribed period that premiums were being held on behalf of insurers.
"The Group should have been matching its investment assets to its liability profile but was in fact investing premiums collected (for which it had a short-term liability) into long-term assets (which were illiquid). Investing
101 says that this is a bad idea, so the company is working hard to address this," said Bezuidenhout.
Up for sale
Even though Insure Group Managers Services (IGMS) showed its strength during the curatorship, it does not mean that the Group was unaffected by the process.
"The curatorship process has led to a possible tainting of the brand and in some cases, a break in the trust relationship, hence the decision to put Insure Group up for sale. New shareholders will approach the
business without the baggage of the curatorship and will be well positioned to restore the reputation of the brand and grow the business" said Bezuidenhout.
He added that a teaser document has been sent to interested parties in the market and that the Group already had several potential bidders who were interested in acquiring
it, and that the process would hopefully be completed by March 2020.
Matters of importance
Bezuidenhout pointed out that while the sale of IGMS was important, it was not proving to be the most time-consuming part of the curatorship process.
A key part of the curatorship process was for Insure Group to divest itself of the assets that had got the Group into trouble in the first place. This was proving to be timeconsuming
because the nature of the assets required him to identify suitable purchasers, and necessitated them to invest time and effort in considering their options.
The first asset the Group needs to sell is its property investment portfolio which is worth an estimated R550 million. The second asset is its mining rehabilitation operation which is
worth an estimated R1.2 billion.
"While we are not desperate to sell these assets, time is not on our side. There is a need to finalise this process so that the new shareholders of Insure Group can grow the company without these assets still being held
by the company," said Bezuidenhout who added that there is keen investor interest in both assets.
Where to from here?
Apart from the new ownership of Insure Group, the curatorship process has led to a few other changes at the Group.
"The business model of the future involves Insure Group collecting premiums directly into the account of the insurer through their new offering. The business model will therefore change from the current interestbased income model, to a fee-based income model as no interest will be earned on premiums in the future. We have already begun this transition and have several insurers who operate on the new basis. By October, we want to have almost half of the premium collections operating on this basis," said Bezuidenhout.
Learning from mistakes is a key aspect of growth and being under curatorship does not mean that Insure Group is tainted. In this instance, it means that the company was forced to sit down and relook its business model. The future for the company now looks much brighter moving forward.