New strategy takes shape at Alexander Forbes


New strategy takes shape at Alexander Forbes

Published Date: 2019-12-10 | Source: Stephen Gunnion | Author: Stephen Gunnion

New strategy takes shape at Alexander Forbes

The financial services group is wrapping up the sale of its insurance businesses as it prepares to expand its employee benefits operation.

Alexander Forbes says it has made good progress with its 'capital light' strategy that will see it exit short-term insurance to focus on its employee benefits business. However, the financial services group said while its strategic initiatives were starting to bear fruit, it would take time before the top-line benefits fully materialised.

The change in strategy to exclude insurance operations means it can hold less regulatory capital. At the end of its last financial year, it paid a special dividend of 30c per share to reduce its excess funds.

For the six months to end-September, it reported a 1% rise in operating income from continuing operations to R1.58 billion and profit for the period reached R250 million. Headline earnings per share were 33% higher at 17.8c and it maintained its interim dividend at 18c per share. Last year's results were impacted by a R287 million software write-off and a R50 million penalty for terminating an IT contract.

It ended with assets under management and administration of R344 billion, down 7% from a year earlier due to client losses during the second half of the previous financial year. However, it said it had made good progress in the current period, with a R2 billion improvement since March.

It said it expected to conclude the disposal of its short-term insurance business early next year. The process for the separate disposals of its group risk business in South Africa, its short-term insurance business in Namibia and its businesses in Uganda and Zambia were also under way. It said it continued to look for acquisitions to boost its employee benefits business.

Its shares added 3.8% to R5.24 yesterday.

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