Fitch lifts Santam, Sanlam Life views to positive

Fitch Ratings said it affirmed Santam Ltd.'s national long-term rating at A+(zaf), affirmed Sanlam Life Insurance Ltd.'s national long-term rating at AA-(zaf) and changed the outlook for both companies to positive from stable following the announcement of Santam's voluntary offer to repurchase up to 10% of its issued ordinary shares from Santam shareholders, an offer by Sanlam Life to purchase Santam shares tendered in excess of 10% of Santam's issued ordinary shares and a broad-based black economic empowerment transaction.

Santam is offering a cash consideration of 102 South African rand per share, which represents a 1.2 billion rand total consideration. Under the black economic empowerment transaction, Santam shareholders will sell 10% of their ordinary shares in Santam for a cash consideration of 82 rand per share.

The outlook revision is motivated by Fitch's opinion that Santam is now a core company within the Sanlam Group and therefore fully benefits from the group support. The agency noted that Santam's capital position, although reduced from 58% regulatory solvency margin to approximately 40% for its South African operations, will remain very strong following the transaction and is supportive of the current rating.

Fitch said it takes a positive view of the Sanlam Group's expected increase in Santam shareholdings, from 53% to up to 72% after the black economic empowerment transaction, which enhances the group diversification across life and non-life insurance and, in the agency's opinion, presents only limited execution risks.

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