- CCA concluded merger will not lead to market dominance due to limited market shares of the two
- But new entity must ensure market stability, safeguard employees and protect policyholders
GAZETTE REPORTER
Hollard Life Assurance Company of Botswana has received regulatory approval to acquire 100 percent of Absa Life Botswana, marking a notable shift in Botswana’s insurance landscape.
The Competition and Consumer Authority (CCA), in its recent review, concluded that the merger would not lead to dominance in the market due to the limited market shares of the two entities.
The approval comes with a set of conditions designed to ensure market stability, safeguard employees, and protect policyholders.
Intermediaries and branches
Hollard Life and Absa Life Botswana bring complementary strengths to the insurance sector.
Hollard Life, a subsidiary of Hollard Holdings Botswana, offers a wide range of long-term insurance products such as individual life, credit life, group life, and savings plans. These are distributed through intermediaries, including brokers and corporate agents.
Absa Life Botswana, a subsidiary of Absa Financial Services Africa, focuses on life insurance products, including funeral cover, group risk policies, and personal loan protection. Its distribution network is centred around Absa Bank Botswana branches.
Slight alteration
While the two companies overlap in areas such as life and funeral insurance, CCA found that the merger would result in only a slight alteration to the market structure, with no substantial competition concerns arising.
To address potential public interest issues, CCA has imposed strict conditions aimed at protecting employees and policyholders.
For three years following the merger, there will be no merger-specific retrenchments or redundancies, except for cases unrelated to the transaction. These include voluntary separations, early retirements, and dismissals for misconduct or poor performance.
Assurances
The merged entity is required to align employment conditions across the workforce to ensure equitable treatment. Additionally, it must submit a detailed report outlining how life insurance policies will be transitioned smoothly from Absa Life to Hollard Life.
This includes assurances that claims processes and policy terms will remain unchanged and that policies will retain their validity.
The approval includes a robust oversight framework. Hollard Life must submit an annual report for three years detailing compliance with the CCA’s conditions.
List of staff
It is also required to share the merger’s terms with all employees and provide the CCA with a list of staff from both companies within 30 business days of the approval date.
CCA emphasided its commitment to safeguarding public interest, noting that its decision aligns with Botswana’s broader economic goals.
The merger is seen as a step towards enhancing efficiency and competitiveness in the insurance market while maintaining employment and protecting consumer interests.
Pooling resources
This merger reflects a growing trend of consolidation in Botswana’s insurance industry. Smaller players are seeking to pool resources and expertise to remain competitive in a challenging market environment.
Hollard’s acquisition of Absa Life positions it to better serve a diverse customer base while navigating an increasingly competitive landscape.