Bona Life is hoping the third time will be the charm, as it emerges from the second statutory management of its brief seven-year life span, courtesy of a P84 million recapitalisation by shareholders.
With a portfolio of over P700 million in policies, Bona Life was placed under statutory management last January, after it failed to meet the prudential capital thresholds set by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA).
The life insurer, which was the third-largest in the country at the time, had struggled due to a shareholder stalemate over the recapitalisation of the business, which saw the firm’s founder, Regina Sikalesele-Vaka, exit early in January 2020.
On Wednesday, former statutory manager, Paul Masie said a recapitalisation by shareholders had proved the most attractive option in resuscitating Bona Life for the policyholders, the majority of whom are pensioners under the Botswana Public Officers Pension Fund (BPOPF). At some point, the pensioners were faced with a possible ‘haircut’ or a forced reduction of their benefits, which would be required to ensure Bona Life met with the regulator’s capital thresholds.
Since January last year, Masie has been administering Bona Life while looking for solutions to its troubles, which at some point included securing external investors to beef up the life insurer’s capital.
“Several conversations were held with the shareholders and this presented a far better option to the policyholders than what the other interested parties had proposed,” he told a virtual briefing.
“The shareholders got to a point where they agreed to recapitalise the business fully and there was no haircut.
“They recapped it over its limit and this was taken to the regulatory authority. From that objective, the statutory management yielded a result that I believe could not have been any better for the policyholders.”
Prior to the latest statutory management, Bona Life’s shareholders included Vaka with 25% equity, the BPOPF indirectly holding 40% and staff 10%.
Capital Management Botswana (CMB), an asset manager under liquidation, held a 25% stake.
Masie said the shareholding would change once CMB’s liquidation was finalised.
“I’m pleased to say there has been positive traction around recovering the CMB assets, because before, it was believed most of the assets could not be recovered, but it has transpired that much of them, under CMB Fund One, which had invested in Bona Life, the bulk can be recovered,” he said.
Bona Life, first established as Bramer Life in 2014, found itself in statutory management in
However, an acrimonious fall out between BPOPF and CMB over ownership of the investment fund, as well as an alleged poor business model at Bona Life, pushed the life insurer back into statutory management in 2020.
Masie told BusinessWeek that whether Bona Life would keep abreast after the latest recapitalisation would be the work of the board.
“Before I arrived, there was a strategy that had been put in place through a firm of consulting actuaries to take Bona Life forward, but unfortunately the CEO resigned and the business went into statutory management,” Masie said in response to BusinessWeek enquiries. “I’m confident that a lot of what was put through by the actuaries can take the business forward.
“The strategy was there, but it did not get to the implementation stage. It still has to be taken to the regulatory authority and there may be alterations because of the lapse of time.
“There’s no assurance and if we could foretell the future, we would all be billionaires.”
He said despite the statutory management, many Bona Life clients remained faithful to the business although there had been some walkouts.
Bona Life is expected to soon launch a turnaround strategy that will include marketing and possible rebranding. The board is also due to finalise appointment of a substantive CEO. Meanwhile, a new entrant in the life insurance industry could complicate Bona Life’s revival. Preferred Life, a company led by one-time Bona Life bidder, Empirica, is due to apply for a life insurance licence in the country.
“Empirica, a consulting firm of actuaries (will be) applying for a life insurance licence in Botswana,” the company said in a brief statement on Wednesday. “With founders who are highly experienced in life insurance and consulting, Preferred Life sets to deliver value for money for clients, built on a bed-rock of science and professionalism.
“Our hallmarks are operational excellence, cutting-edge risk management, and sophisticated assets and liability management.”
It is understood Empirica is finalising funding and other processes.