Outsurance buys into Swabou

SOUTH African insurance company Outsurance has acquired a 49 per cent stake in Swabou Insurance, formerly wholly owned by FNB Namibia Holdings, in a bid to salvage the poorly performing company.

Although both FNB and Outsurance are part of FirstRand South Africa, the companies act independently and can buy within the Group. “Adverse loss ratios and insufficient economies of scale impacted negatively on Swabou Insurance’s results.”Against this background, the Swabou Insurance board approved a process of developing a more sustainable business model whereby the Swabou Insurance operations will be repositioned,” FNB Holdings announced yesterday.The announcement revealed that Swabou Insurance’s profits had been declining over the past few years, as the company was failing to survive the “intense competitive environment and difficult conditions under which the short-term industry traded”.This transaction, which will become effective on July 1, will usher in changes at the company, with 17 staff members losing their jobs with the restructuring.Affected positions will cut across the company, from senior management to ordinary workers, said the FNB Head of Strategic Marketing and Communications, Dixon Norval, in an interview on Wednesday.He was quick to add that measures were being put in place to ensure the redeployment of some of the redundant staff within the Group.Swabou Insurance’s total staff complement is 1 444, and these employees were notified of the ‘repositioning’ of the company on Tuesday.Norval could not say what management changes the new investors would undertake, but said the name Swabou Insurance would remain in use.First National Bank Limited and Swabou merged in July 2003, resulting in the establishment of FNB Namibia Holdings Limited as a listed entity on the Namibian Stock Exchange.Last week, FNB announced a healthy half-year growth ending December 2006, with earnings having increased by 21 per cent to N$136,1 million.At the close of trade on the local bourse on Wednesday, FNB shares remained unchanged from at N$7,51.”Adverse loss ratios and insufficient economies of scale impacted negatively on Swabou Insurance’s results.”Against this background, the Swabou Insurance board approved a process of developing a more sustainable business model whereby the Swabou Insurance operations will be repositioned,” FNB Holdings announced yesterday.The announcement revealed that Swabou Insurance’s profits had been declining over the past few years, as the company was failing to survive the “intense competitive environment and difficult conditions under which the short-term industry traded”.This transaction, which will become effective on July 1, will usher in changes at the company, with 17 staff members losing their jobs with the restructuring.Affected positions will cut across the company, from senior management to ordinary workers, said the FNB Head of Strategic Marketing and Communications, Dixon Norval, in an interview on Wednesday. He was quick to add that measures were being put in place to ensure the redeployment of some of the redundant staff within the Group.Swabou Insurance’s total staff complement is 1 444, and these employees were notified of the ‘repositioning’ of the company on Tuesday.Norval could not say what management changes the new investors would undertake, but said the name Swabou Insurance would remain in use.First National Bank Limited and Swabou merged in July 2003, resulting in the establishment of FNB Namibia Holdings Limited as a listed entity on the Namibian Stock Exchange.Last week, FNB announced a healthy half-year growth ending December 2006, with earnings having increased by 21 per cent to N$136,1 million.At the close of trade on the local bourse on Wednesday, FNB shares remained unchanged from at N$7,51.