Short-term insurer King Price has confirmed its entry into the South African life insurance market after regulators this week gave the green light for its acquisition of life insurer Stangen from JSE-listed African Phoenix Investments, for R140 million.
The move allows King Price to achieve its ambition of gaining a running start into the local life insurance market, said chief executive Gideon Galloway. The insurer plans to launch the King Price life brand within the next 12 months, and forecasts that life products will make up half of its revenue within the next decade.
“King Price and Stangen is a partnership that just makes sense. We’re teaming up to reinvent life insurance for South Africans. We’d always planned to enter the life insurance market, which is three times the size of the short-term insurance market in SA, and buying an existing, niche life insurance business makes sense on so many levels,” said Galloway.
King Price, which was founded seven years ago, sells more than 12,000 policies a month, with annual premium of R2.3 billion. Stangen, which was established in 1948, has more than 55,000 policyholders across its life cover, group schemes insurance and funeral cover businesses. The acquisition will see Stangen’s entire 150-strong team, including managing director Marius Botha, move into the King Price structure and building.
“We’re very excited to join forces with King Price in this way, and to continue exploring and building disruptive propositions in the market,” said Botha.
Galloway is confident that King Price will be able to sustain its 40% year-on-year growth trajectory following the acquisition, saying that its use of advanced data analytics and technology will help streamline Stangen’s processes and deliver keen service and prices to a broader pool of customers.
“Our existing distribution channels are entrenched and we’ll rely on them to increase the scale of the Stangen book. We see huge potential for significant growth in the market,” he said. “Consumers deserve less burden, more reassurance, more flexibility, and more opportunities to live a little.”
King Price launched its bid for the Stangen business in June 2019. The acquisition was subject to regulatory approval, which was received on 28 February 2020, and has an effective date of 1 October 2019.
King Price entered the highly-competitive South African insurance market in June 2012 with a world-first customer-centric insurance model that automatically decreases comprehensive car premiums monthly in line with the cars’ depreciating values. Since then, the insurer has expanded its personal lines products, launched successful commercial and specialised insurance divisions, and built a thriving business in Namibia.