Sanlam Keeps AfroCentric Stake After Bonitas Contract Loss

In Short

• Sanlam says it will not sell its majority stake in AfroCentric, even after a major client loss.
• The insurer has written down the value of its AfroCentric investment to zero.
• AfroCentric is cutting costs and reshaping operations after its split with Bonitas.

What Happened

Sanlam says it still sees long-term value in its 60% stake in AfroCentric, despite a setback tied to Bonitas Medical Fund.

Bonitas ended its administration and managed care relationship with AfroCentric at the end of May. Medical scheme administration is the back-office work that runs a health plan, like claims processing, member management, and provider payments. Managed care is the set of rules and clinical checks used to control costs and improve outcomes.

After the contract ended, Sanlam wrote down its AfroCentric investment to nil. A write-down is an accounting step where a company reduces an asset’s stated value because future cash flows look weaker.

Sanlam CEO Paul Hanratty said the group is focused on a “rightsizing” exercise at AfroCentric. That means cutting the cost base to match the business’s new revenue level. Hanratty also ruled out disposing of the investment, saying the group believes the business has strong management but faces execution challenges.

AfroCentric operates across three clusters, services, pharmaceuticals, and corporate solutions. The services unit includes its medical scheme administration operations. The pharmaceuticals unit covers manufacturing, wholesale, and retail of medicines and supplements.

Why It Matters

Sanlam bought control of AfroCentric to add healthcare capabilities to its wider financial services offering. Keeping the stake signals Sanlam is willing to absorb near-term losses while it tries to stabilise the healthcare unit and rebuild contracted revenue.

For South Africa’s healthcare services market, the Bonitas split highlights how dependent administrators can be on a small number of large schemes. When a major contract moves, it can trigger rapid cost cuts, restructures, and leadership changes.

The next indicator to watch is whether AfroCentric can replace lost scheme administration volumes and restore profitability without further impairments.