Brimstone to expand Lion’s share

7/12/2010 12:40:05 PM

SIMON MUNDY

Contributing Writer

BLACK empowerment company Brimstone would look to expand Lion of Africa’s offerings beyond insurance, financial director Lawrie Brozin said on Friday, after the company took full ownership of the subsidiary.

Brimstone previously owned 74% of Lion, with the remainder owned by Commlife Holdings. The company said on Friday it had agreed to buy Commlife’s stake for R53,4m in cash — a sum subject to a possible upwards adjustment of R2,5m.

This would allow Brimstone “to better leverage the asset, rationalise capital management synergies within the group, and explore related opportunities in the insurance industry”.

But Mr Brozin told Business Day a further reason for the move was a desire to avoid any possible conflict of interest involving Fred Robertson, who is both executive deputy chairman of Brimstone and chairman of Commlife.

“We’re going to build Lion further in the next few years. It’s come a long way — we’ve owned it for the last decade and have created a very strong brand.”

Lion concentrates on corporate and commercial insurance but Mr Brozin said Brimstone wanted to move the company into other areas of financial services including asset management.

“It’s part of the package. In insurance, you generate a lot of cash, and you need to manage the cash efficiently.”

But the diversification would not take place soon, he said. “Perhaps in the next three to four years — we need to find the right people, and the right opportunities.”

The acquisition was still subject to the approval of the registrar of short-term insurance.

The book value of Brimstone’s assets rose from R267,8m in 2002 to R5,59bn last year. That figure would fall this year, Mr Brozin said, as Brimstone unbundled part of its holding in Life Healthcare.

Brimstone holds 15,6% of Life and will unbundle about 9,4% to shareholders. Mr Brozin expected the unbundling to be completed by the middle of next month.

“We wanted to reward the shareholders for their loyalty over the years. But it’s a very good business, so we’ll still retain a stake.”

mundys@bdfm.co.za