An emerging giant with a solid pedigree
Thebe Hosken Insurance Brokers, the largest black-controlled short-term insurance broking company on the continent, celebrates its 50th anniversary this year. ZILLA EFRAT reports
Today, its annual revenues are approaching R80-million. These have been growing by well over 20% a year and they were up by 55% in the past financial year.
Thebe Hosken employs 360 people and boasts a strong network with 20 branches spread around the country.
Previously called Msele Hosken Insurance Brokers, the company changed its name on March 1 this year.
Its controlling shareholder is empowerment group Thebe Investment Corporation, but it is also able to call on the expertise of Price Forbes, another significant shareholder.
Thebe Hosken is a leading provider of risk-consulting services and has a fast-growing employee benefits division.
It also ranks as one of South Africa's 10 largest short-term brokers, but managing director Chris Sounes says the goal is to move into the top five.
In addition to organic growth and the imminent launch of new products, Thebe Hosken plans to achieve this goal through further acquisitions of strategic regional brokers.
"Any deal we do must either strengthen our penetration of an area we already operate in or it must give us a foothold in a new region," says Sounes.
Thebe Hosken has grown significantly through acquisitions over the past three years, having snapped up several brokers around the country, including firms in Durban, the Eastern Cape, Pretoria, Nelspruit, Cape Town and Bloemfontein.
Several more acquisitions - including that of a black-controlled brokerage - may be in the pipeline.
Litha Nyhonyha, chairman of Thebe Hosken Insurance Brokers and executive director of Thebe Financial Holdings, confirms that the group is talking to a black-owned firm. All he will say about this company is that it is well known, has been in business for the past decade has a high profile client list and a good spread of branches.
If the deal goes ahead it will help Thebe Hosken secure a solid pool of experienced senior black executives.
All Thebe Hosken divisions have various regional development plans on their drawing boards. To complement these, the group is poised to release a series of innovative new products on a national basis.
Sounes is not ready to talk about these yet, but expects their value added features to significantly boost Thebe Hosken's market penetration.
He adds that a future drive will be to develop new products which better suit and take into account the cultural differences of the mass market and emerging companies. Both have traditionally not been buyers of short-term insurance.
On other growth plans, Sounes says: "We plan to focus much more on public-sector business, which is an area we expect to increasingly open up to us because of our empowerment shareholders and our human resources spread."
In line with market trends, Thebe Hosken is also moving to grow its fee income, as opposed to commission income.
However, Sounes says: "At the end of the day it does not matter whether we get a commission or a fee. Customers are increasingly asking us to justify what we are doing for the money we earn and we are negotiating fees depending on the services customers need.
"But this does not always mean that we get paid less. For example, if a large corporation chose to self-insure, we would lose out on the commissions on the premium it is not paying. But if we negotiated a fee, it would be paid for the professional advice given to help the corporation manage its self-insurance programme."
Adds Nyhonyha: "Strategically, I would like to see Thebe Benefits Consultants getting a critical mass of its own. The bulk of its income is still from the healthcare side and we plan to change this by working with our partner, Price Forbes, to build new products. We are also looking at acquisitions for this side of our business."
Sounes says the firm does not intend expanding into Africa - it has only one representative outside the country, in Lesotho - because there is ample opportunity "to drastically grow our business within South Africa before looking outside".
Nyhonyha says a listing is not on the cards because "we do not believe that it has yet reached the critical mass needed".