◆ Placed under the sign of synergies, the Atlanta / Sanad merger has just received the approval of the Capital Market Authority pending the shareholder vote on September 25.
Par A. hlimi
Another step taken in the merger by absorption of Sanad by its parent company Atlanta, which management prefers to describe as a merger. Reconciliation, because the two companies have almost similar sizes. This is the most important operation of the new school year, which should lead to the birth of a contender for national leadership in the non-life segment. The information note validated this week by the AMMC (Moroccan Capital Market Authority) is a new step in the process that should lead to this merger. It brings new elements on the technical level, linked in particular to the notions of valuation, but above all clarifies through comments from management on the objectives of the merger.
In short: synergies. The word is cited no less than 17 times in the reference document. Whether at the commercial, operational or financial level, the expected synergies are numerous. We know that Atlanta and Sanad operate independently. On the market, they even compete on certain issues. But their particularity is that they share support functions such as management control, asset management, internal control, reinsurance and legal matters.
Those responsible for these functions are common to both companies, although the teams dedicated to these functions are separate. On the financial side, the two companies have cash pooling mechanisms, which are governed by regulated loan and cash advance agreements. It is now a matter of moving to a higher level with a new solid group with reinforced equity.
Growth synergies
The reference document specifies the objectives of management. The first element mentioned is the additional turnover that the merger will generate and which is linked to the optimization of the territorial network and its extension: the network. In addition, this should allow access to a larger number and business size through the network of brokers. The extension of the product range distributed by the bancassurance channel and the support of agent networks in the distribution of products for SMEs, VSEs and liberal professions are also sought.
Technical synergies are also expected with the anticipated improvement in claims, in particular through the adoption of common practices that have demonstrated their effectiveness on health risk, the gradual convergence of offers and prices, the optimization of the management of fraud and the alignment of commission levels and strengthening of negotiating power vis-à-vis brokers (better trading conditions).
The group should also be able to optimize its insurance purchases and avoid any additional capital requirements linked to the implementation of SBR regulations. Atlanta will also be able to better negotiate its reinsurance costs and optimize its structural costs. This information note was well received by investors. Atlanta shares are part of the closed club of companies whose price shows a positive progression in 2020 (+ 4%).
It is also the only insurance company and one of the two financials present in this table made up of 15 companies that are resisting the crisis. Investors expect results to improve in the first half of the year, since the company has carried out an operation on the young OPCI market and which has been recorded in the accounts for the first half. Far from being carried out under regulatory or financial pressure, this operation, long suggested in business circles and often publicly refuted by top management, will turn the century-old page of Sanad. As it will open a new chapter in the insurance history of the Holmarcom group, majority in Atlanta, and which should unsurprisingly bring the merger to a successful conclusion during the shareholders vote scheduled for September 25
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