Guardrisk launches next phase of its evolution

7 March 2019

Guardrisk, a subsidiary of JSE-listed MMI Holdings, launched its newest offering, Guardrisk General Insurance (GGI) to over 230 brokers in Johannesburg on 6 March. Billed as “the next exciting phase of Guardrisk’s continuous evolution”, the launch of GGI heralds the arrival of a mid-tier corporate commercial offering in specific niche markets, offering brokers an exciting alternative for their clients.

Speaking at the launch, Guardrisk CEO, Herman Schoeman said that GGI will offer the midmarket the kind of actuarial modelling generally only be found in the large corporate market.

Schoeman told brokers that Guardrisk will “harness the same innovative approach that made it South Africa’s leading cell captive insurer to provide midsized companies with professional underwriting at competitive costs and sustainable rates”. Guardrisk launched the cell captive concept in 1993, forever changing the insurance landscape, and today writes around R20bn rand of premium. The business is well on its way to deliver R1bn rand of revenue in the financial year ending 30 June 2019.

Richard Eales, Managing Executive of Guardrisk’s non-life operation, Guardrisk Insurance, said that, in order to broaden its general offering, the business embarked on a deliberate and focused strategy of acquiring specialist underwriting manager agencies (UMAs) with the necessary expertise to complement its own resources.

This includes the acquisition of Marine Underwriting Manager and C&G Engineering and Guarantees underwriters in 2017, which have since been fully integrated as Guardrisk’s Marine, Engineering and Guarantee underwriting divisions. Eales confirmed that future acquisitions will be considered “at the right price and where we can see the long-term benefit to the company, particularly with regards to skills acquisition”.

GGI is headed by industry veteran, Walter Cronje, who told the audience that part of the rationale behind the formation of GGI was to “leverage off our existing well-developed broker distribution channel by opening up a direct channel for brokers to access commercial capacity directly from Guardrisk. This is in addition to the existing channels, namely the specific products of Guardrisk’s UMAs.”

Asked about the capacity that Guardrisk be putting on the table for GGI, Cronje said, “one of the challenges we have had is to assess the various reinsurance structures we have in place in the wider Guardrisk context and see how we can maximise those arrangements for ourselves and clients. We are some way down the line with that exercise and the ultimate outcome will determine our capacity offering, but we are aiming at between R400 million and R500 million on a net and treaty basis”. He stressed that this capacity is separate to the existing capacity of Guardrisk’s UMAs.

But, according to Cronje, Guardrisk is not merely “bringing new capacity to the market to chase top-line”.

“We are in a unique situation whereby we have an existing book of generally profitable business, producing a decent underwriting margin, that we think is sustainable. We will follow the same cautious and measured approach that has made Guardrisk the success it is today, applying scientific underwriting techniques and partnering with credible reinsurers who understand where we want to take this business in the long-term.

The GGI offering currently consists of motor, personal accident, engineering, guarantees, marine, medical gap and various forms of corporate and commercial insurance, including municipal. A liability offering is also in the offing.