Schalk Malan, CEO and co-founder of BrightRock, one of SA’s fastest-growing life insurance companies, said access to Sanlam’s sizeable balance sheet was the chief reason he and his partners decided to sell the company to the group, a transaction completed earlier this year.
BrightRock was launched in the intermediated, individual risk market in 2012 and experienced exponential growth in a short period, establishing a strong market presence.
BrightRock also operates in the funeral insurance market, where it provides underwriting and other insurance services to large funeral parlour businesses around SA.
Malan, who with Suzanne Stevens and Sean Hanlon gave up executive jobs at Discovery to establish the company, said Sanlam approached them as early as 2015, two years before its initial investment.
“We began having initial conversations with Sanlam in 2015/16. We quickly came onto their radar by being a disrupter in the market and they saw value in what we offered in the market place and that we’re accessing a different segment of the market,” said Malan.
“If you look at the life insurance industry, it’s a very capital-intensive business. The barriers to entry are very high and we are just felt getting full access to Sanlam’s balance sheet and capital base to acquire new business, to grow, to leverage opportunities that lie ahead for us.” It was in the best interests of the business, he said.
Sanlam, worth R150bn on the JSE, first invested in BrightRock in 2017, acquiring a 50% stake for about R700m. This year, the group took full ownership of the upstart, forking out another R400m.
The latest NMG market share survey shows that Sanlam and BrightRock’s offerings combined have the largest market share of new retail risk sales in the independent broker market.
Sanlam considers the BrightRock transaction as part of its strategy to build a fortress in its home market as it looks to grow further into Africa. Other transactions meant to build a fortress position include the acquisition of AfroCentric and Capital Legacy.
Strong outlook
Malan said macroeconomic conditions are tough in SA, and the need for life insurance has never been stronger. This bodes well for the company’s growth plans.
“The support of Sanlam allows us to grow organically in an aggressive way into the market. There is a huge amount of scope to grow in SA for BrightRock. Our market share post-Covid has pushed back a little bit, hovering between 12% and 15%. The reality is that it is a very competitive industry,” said Malan.
“We believe we can achieve the number one position in the independent financial adviser (IFA) market. What has been fascinating is that the difference between the top four players in the market has shrunk and is closer than it was six years ago. This speaks to a more democratised market, with consumers getting more optionality and choosing more carefully what they want.”
BrightRock products are distributed by more than 5,000 IFAs. SA has more than 13,000 licensed IFAs operating throughout the country.
Malan said the company is devoting huge resources and energy to ensure the client and broker experience is much easier.
“Things like allowing clients to submit claims from their phones with intelligent questionnaires go a long way. We are also working hard on our product delivery. It’s a very simple product to use in the adviser space, but the back end is sophisticated and a lot of that is being made simpler for clients and advisers to use,” he said
“In the distribution space, we have a big focus on growing the distribution team. We have more than 5,000 contracted advisers, but not all of them are 100% supporters of the business. We are continuously looking to convert IFAs into supporters. A supporter is an IFA that gives BrightRock business on a regular basis.”
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