11 May 2010
South African financial services and insurance group Discovery is expanding its presence in the UK through the acquisition of Standard Life Healthcare, Britain’s fourth-largest private medical insurer, for about R1.56-billion (£138-million).
Discovery has been active in the UK since 2004 through PruHealth, a joint venture between itself and the UK’s Prudential Assurance Company, and the UK has since then been a key focus area for Discovery’s international strategy.
As part of the transaction, Standard Life will be merged into PruHealth, enabling Discovery to raise its ownership in the joint venture to 75%, while still retaining Prudential as a partner.
“While PruHealth has won awards for product innovation, Standard Life Healthcare has been broadly recognised for its excellence in service delivery,” Discovery CEO Adrian Gore said in a statement this week.
“The integration of our assets will result in a well-balanced client mix, a comprehensive and complementary product range, a broadening of expertise in the UK, and a national distribution network of agents and brokers,” he said.
“This will significantly strengthen our competitive position, and provide the platform for strong future growth.”
New competitor of scale
According to the statement, the UK has a large, well developed financial services market which is receptive to the consumer-driven product philosophy that Discovery has brought to both the health insurance and protection industries.
The continued trend towards wellness and consumerism, as well as the increased financial pressure that the [UK’s National Health Service] is expected to face as a result of tighter public spending, creates significant growth opportunities for Discovery’s innovative, integrated model, the company said.
The transaction creates a new competitor of scale in the UK private medical insurance market, covering approximately 700 000 people, and attracting annual premiums of approximately R4.1-billion (£370-million).
“We believe Discovery’s acquisition of Standard Life Healthcare provides significant opportunities in the UK for both PruHealth and PruProtect and will create value for both Discovery and Prudential,” said Prudential UK and Europe deputy CEO Andy Crossley.
“We look forward to working with Discovery to integrate Standard Life Healthcare into the joint venture arrangement.”
The transaction is subject to obtaining the necessary regulatory approvals from the Financial Services Authority (UK) and the South African Reserve Bank, which are expected to take approximately three months.
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