Capitec and Sanlam have decided to part ways with regard to their funeral product co-operation agreement.
The termination of the joint agreement will become effective from October 31, 2024, according to a statement.
Capitec has chosen to go into the insurance space alone and will be launching a new insurance branch called Capitec Life Limited.
Capitec Life will be a newly-formed licensed insurer and “will take over the administration of the in-force insurance book pursuant to the terms of the relevant agreements, and will commence writing new funeral business on its own insurance license”.
“The policies in-force on the termination date will remain in the Centriq cell captive licence and will be transferred to the Capitec Life license at a later date, subject to the relevant regulatory requirements and approvals,” Capitec said.
Sanlam on Monday said that once the agreement was over, it would continue to provide reinsurance and administration services as per the agreement.
“As a result of the termination of the Funeral Product Co-Operation Arrangement, a reinsurance recapture amount of R1.9bn is payable on or before the termination date to the relevant Sanlam entities,” Sanlam said.
“The reinsurance recapture amount represents the loss to the Sanlam group for its 30% participation in the Funeral Product Co-operation Arrangement expected to be in force at October 31, 2024.”
In September, the bank noted that it had added one million new clients in the first six months of 2023.
CEO, Gerrie Fourie said the bank had managed to grow at about two million new clients every year, for the past five years.
The bank now has around 21.1 million active clients, which was a significant proportion of South Africans. Fourie said if you add all the clients of all the banks in the country together, you come up with between 55 and 56 million people.
He said from Capitec Bank’s point of view, some 7.5 million of its clients are “fully banked”, in that they use a Capitec card or product first to pay for things, earn more than R3,500 a month in cash and do all their transactions at the bank. This number, he said, is about six times more than that of its competitors.
The number of clients embracing digital transactions grew 8% to 11.7 million, while app-user numbers climbed to 10.2 million, making Capitec the biggest digital bank in South Africa.