Zurich Financial Services Group announced that it has signed an agreement to sell a 10 percent stake of South African Eagle Insurance Company Limited (SA Eagle), a majority-owned subsidiary, to Royal Bafokeng Finance (RBF), a company wholly-owned by the Royal Bafokeng Nation (RBN).
Zurich said the transaction underscores its “commitment to the South African market and to the government’s initiative for Black Economic Empowerment (BEE). The goal of BEE, as set out in the Financial Sector Charter, is to strengthen South Africa’s democracy through broadening economic participation and creating opportunities for the black people of South Africa.
“As part of the agreement, RBF is entitled to nominate one director to the SA Eagle Board and it has an option to increase its shareholding in line with the ownership requirements of the Financial Sector Charter. Moreover, SA Eagle has undertaken, in line with the terms of the Charter, to fund specific projects nominated by RBF in areas such as corporate social investment, enterprise development and empowerment financing, subject to approval by the SA Eagle Board.”
Martin South, CEO of Zurich’s International Businesses Division, noted: “We are delighted about this transaction, which supports Black Economic Empowerment in South Africa. We believe that a meaningful participation in the mainstream economy by previously disadvantaged people is essential for the success of the South African economy and democracy. The transaction provides us with a chance to explore new business opportunities, which support the spirit of the Financial Sector Charter and provide historically disadvantaged people with access to financial services. We look forward to a fruitful collaboration with RBF.”
Kgosi Leruo Molotlegi, King of the Royal Bafokeng Nation, indicated that his constituents were “delighted to be associated with Zurich. The acquisition of this interest in a leading financial services company is an important step in broadening the community’s access to cost-effective financial products and increasing our involvement in the national economy.”
SA Eagle recorded approximately $515 million of gross written premiums for the year ended December 31, 2004 on a local statutory reporting basis. It is a majority-owned subsidiary of Zurich and is listed on the JSE Securities Exchange South Africa. It operates in both the personal lines and commercial markets, transacting all classes of short term insurance. It has a network of offices throughout South Africa, subsidiary insurance companies in Botswana and Zimbabwe, and has interests in insurance companies in Mauritius and Swaziland.
Zurich’s announcement described RBN as “a community of approximately 300 000 people based in the Rustenburg valley region in the North West Province in South Africa. During the 1860’s, RBN started a land-buying program and in the 1920’s, substantial platinum group metal reserves were discovered on RBN land. RBN spent earnings from royalties paid by mining companies operating on RBN land on the development of substantial physical infrastructure that has benefited all the inhabitants of the region.”
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