PSG Buys Short-Term Insurer

Johannesburg, Aug 31, 2010 (Business Day/All Africa Global Media via COMTEX) -- PSG's CEO, Willem Theron, said yesterday that the opportunity to buy the company from key shareholders, former Springbok rugby player Ockie Oosthuizen and his family.

PSG Konsult has bought short- term broker Diagonal Insurance for an undisclosed sum, in a move that is expected to increase the value of short-term insurance premiums collected on behalf of insurers to about R1,6bn a year.

PSG's CEO, Willem Theron, said yesterday that the opportunity to buy the company from key shareholders, former Springbok rugby player Ockie Oosthuizen and his family, came at the right moment . PSG was on the lookout for "appropriate" acquisition opportunities.

The company is always keen to grow through acquisitions, although its policy is never to over- pay for an asset, he said. But buying Diagonal Insurance was not a difficult decision to make because of the price, which he did not disclose . "It is an opportunity that we came across, although we have known the owner for quite a while . And when he decided it was time to exit, we decided to buy the company," Mr Theron said.

Diagonal Insurance has offices in Randburg, Pretoria, Durban, Secunda and the Western Cape.

It has short-term insurance and administration services offered to about 12000 clients with premium income of about R175m a year.

With the acquisition, Mr Theron said PSG would increase the value of short-term insurance premiums it collected on behalf of insurers from R1,45bn to about R1,6bn a year. The transaction will be financed through PSG's own resources and loans.

After interest, the acquisition will contribute roughly 5% to PSG Konsult's headline earnings and headline earnings per share.

PSG's turnover, consisting of commission and other operating income, increased by 10,4% to R834,7m in the year to March, while profit before tax rose by 4,1% to R137 m.

"While the five offices of Diagonal Insurance will be integrated into the countrywide PSG Konsult network, it is envisaged that Diagonal's administration platform will be incorporated into PSG Konsult's Topexec," Mr Theron said.

"The transaction especially strengthens (our) footprint in KwaZulu-Natal, while its short- term insurance activities are supplemented with services such as financial planning, stockbroking, local and international investments and trust services. The clients at these five new offices therefore gain access to a wide range of PSG Konsult services."