GIB HOLDINGS (PTY) LIMITED
GIB HOLDINGS (PTY) LIMITED
Dedication, Determination & Application Paying Off For GIB PRODUCTION: Manelesi Dumasi
For the past 37 years, GIB Holdings has been growing significantly, and fulfilling its promise of leaving no stone unturned across South Africa’s impressive insurance broking market. Deputy Chairman and Founder Dennis Gamsy talks to Enterprise Africa about how GIB continues to grow, and how the company has managed to remain independent.
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South Africa remains a vastly underinsured nation. The country is home to a sophisticated and well-established financial services industry, but many still choose not to take out products that could seriously benefit their lives. According to the AA, as much as 70% of South Africa’s 12 million vehicles are still uninsured. According to the Health Minister, only 16% of the population is covered under a medical aid scheme. Adding to the problem, just 13% of South Africans who live in metropolitan areas have a relationship with a financial advisor. The reasons given for avoiding insurance? “It’s a luxury I can’t afford. It will never happen to me, and I
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don’t believe in insurance.” However, the country enjoys a thriving insurance and financial services industry – the most developed on the continent, operating in line with the highest international standards and the envy of many first world countries. Protection against risk has never been a bigger market. Today, you can insure everything from your house, plane and phone to your pet, business and your family’s lives. So, why would an entrepreneur choose to get into this market? It’s crowded with strong competitors, and the sentiment across the population remains precarious. According to Dennis Gamsy,
Founder and Deputy Chairman of GIB Holdings – a SA-based insurance and financial services institution – the key to success is to leave no stone untuned. Established in 1982, GIB started life as a general short-term broker. Gamsy, now an industry veteran, saw the opportunity for an independent broker to service multiple product lines, and the business quickly went about creating a strong network in service of its clients. “Philosophically, we made the decision very early on in our life not to leave any stone unturned,” Gamsy tells Enterprise Africa. “We didn’t want any gaps in any areas of insurance. The result of that is that we have classic
INDUSTRY FOCUS: FINANCE
short-term insurance broking, we have aviation insurance, marine insurance, re-insurance we have a minority stake in Debtsource, where we house our credit insurance division and we have a strong and growing Employee Benefits Company. We have chosen to set up different companies, with different Managing Directors, across all of the disciplines in the insurance industry. It is costly but we are a very entrepreneurial company. “We try and fill product lines as they are demanded by the market,” he adds. “We do believe we cover all bases but it all depends on the people you can find. When we started GIB Aviation, for example, we knew we needed the right person – it’s no use starting without the appropriate expertise. We employed an ex-Lloyds aviation broker as Managing Director of GIB Aviation 20 years ago and he remains as its MD. Any new product lines we look at, we demand appropriate people with specialist skills. South Africa doesn’t have an abundance of such characters and we believe you cannot call yourself a master of a particular area unless you have top professionals. Part of our strategy is to buy teams from larger brokers. If there was a particular line of business that required specialist expertise, we would look at acquiring a team from a broking house that is strong in that particular area of expertise.”
// PHILOSOPHICALLY, WE MADE THE DECISION VERY EARLY ON IN OUR LIFE NOT TO LEAVE ANY STONE UNTURNED. WE DIDN’T WANT ANY GAPS IN ANY AREAS OF INSURANCE // 4 / www.enterprise-africa.net
NETWORK PARTNERS In the late 80s and early 90s, as GIB was growing and its reputation becoming more widespread, the company began to pick up bigger, corporate-style clients. This was fantastic news for GIB, but it meant that expansion was needed to service clients effectively. International exposure was required so GIB looked to the world’s large broking networks. “We became the first South African and African partner in AssurexGlobal. They had partners in 132 countries and we became the South African arm,” says Gamsy. “As we continued, another network – Unison Global of Germany – approached us to be their partner and we did so. In 2011/12, Marsh purchased Alexander Forbes to become the largest broker in South Africa and, at a similar time, Aon purchased GlenMib becoming the second largest broker. The result of those two deals meant that other networks that were working with Alexander Forbes or GlenMib felt uncomfortable with Marsh and Aon as they were competing universally against them. We were the approached and became the network partners for Worldwide Broker Network (WBN), A.J. Gallagher - listed on the NYSE, Jiang Tai of China, FUNK and Verspieren, the largest independent brokers in Germany and France respectively. “We are now the network partners for all of these networks and that gives us a very useful flow of business on a constant basis. A result of this flow of international business into GIB is new business around Africa. To formalise that effectively, we established the GIB Africa Alliance where we have a broker network of our own in 40 countries across the African continent so that we can adequately service all of the networks that supply business into GIB.” Connections with these networks have catapulted the business to the top echelons of the industry and GIB is now recognised as a wholly-owned, proudly South African, independent insurance broking group and one of
// THE SHAREHOLDERS RUN THIS COMPANY – THAT IS EXTREMELY DIFFERENT FROM ANY OF THE LARGER BROKERS AND INSURANCE COMPANIES IN THIS COUNTRY // the major composite insurance broking houses in the country, known for independence, competence, integrity and competitiveness. A key element, helping to further develop this reputation and status, came in 2018 when GIB invested into a strategy that would gain it Level One B-BBEE status. Gamsy is clear that the company wants to be involved in the full spectrum of South African society, and a Level One B-BBEE accreditation is the only way to unlock the potential opportunities that exist among the country’s state-owned enterprises. “We are among the largest independent brokers in South Africa. We want to be fully participative in the SA business world and so we have become seriously black empowered,” he says. “We are a Level One Broad Based empowerment company and that is the top level of empowerment of any broker in this country. Our partner of over 9 years is Lephatsi, a financial services company driven by Herman (Johannesburg’s Mayor) and Connie Mashaba. I have known Herman and Connie for more than 25 years as members of YPO so it wasn’t a surprise for us to get together. It has been a fantastic BEE partnership which is not easily said in the context of the South African firmament. Herman, because of his integrity resigned as Chairperson of GIB when he became Mayor of Johannesburg about three years ago and was succeeded as Chairperson by Connie.
GIB HOLDINGS (PTY) LIMITED
“We spend a lot on retaining our Level One B-BBEE, and that combined with compliance are non-productive areas of cost. It takes a bit out to maintain those levels and it is costly. We used to be involved, for example as the Brokers to SANRAL, but we were a Level Four. When we went to be reappointed as their brokers, the first question asked was about our BEE level and we were immediately disqualified. We could’ve stayed at Level Four, but we decided to work towards Level One so that we could requalify going forward. We will certainly be looking to get back into their business in the future.” GROWING GIB GIB has been a growing business for 37 years. Expansion into new product lines, growth with international partner networks, acquisition and merger activity, and internal investment into staff and compliance are all part of a strategy which sees the company stick to its credo ‘Return To Service’, an approach which has helped delight clients for decades. In the future, Gamsy sees growth potential on the African continent, where – especially in sub-Saharan Africa – the insurance market remains in its infancy compared to the developed world. Many remain uninsured across a large number of product lines and the overarching insurance penetration rate is low, creating a gap in the market for a player that has capacity, experience and reach to effectively service a growing middleclass and growing commercial demand. “Africa is certainly a growth area because we do get business passed to us through our networks on a weekly basis - it’s an important growth area for us,” he says. “Our other growth strategy surrounds acquisition and mergers in South Africa. We are not scared of a merging situation with appropriate broking houses and we are frequently on the lookout for acquisition opportunities. There’s a huge amount of compliance required in the insurance
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industry and it’s a costly business to set up and run. We are big enough to have compliance as part and parcel of what we do and that enables us to talk acquisitions to medium-sized firms that don’t have that facility of their own.” GIB has offices in Johannesburg, Durban and Cape Town and is home to more than 230 people across the group. While Gamsy says that a presence in these major metros is the minimum that you need to operate as a countrywide broker, he admits that expansion through acquisition could tempt the company into new regions. “There is almost no time that we are not negotiating some form of acquisition. They don’t always come to fruition, but right now we are negotiating on a number of different fronts.” Unfortunately for GIB, being active in an economy which is prone to unpredictability, and being exposed to the tides of the global economy, has not created an environment
// SUCCESS IN ANY WALK OF LIFE IS DOWN TO DEDICATION, DETERMINATION AND APPLICATION // 6 / www.enterprise-africa.net
conducive for strong growth. Gamsy cites “external factors” as the only drawbacks to the company’s development. “We are growing very nicely but we could be growing so much better. Business success depends largely on confidence without which there is a despondency around. Uncertainty continues and, in a business sense, we need political action to ensure confidence. “There is an emigration of skills and that impacts demand for life insurance. This is a hell of a country and it’s hard to match our living conditions anywhere else in the world. We should be booming because we have so much to offer. The first thing we need is to sort out our educational system which is appalling, and we also need to sort out crime which is equally as appalling. Until those two areas are resolved, we will continue to face difficulties. If things were sorted, people would be coming into the country because it is an incredible place to live – that would impact the demand for insurance.” At the start of 2019, the SA economy contracted the most in a decade for a first quarter. Unemployment is now the highest it has been in 11 years. Despite this, GIB is ambitious.
PROUDLY SOUTH AFRICAN GIB – which originally stood for Gamsy Insurance Brokers – came about after Dennis Gamsy realised the importance of being independent, and not having to report to an international head office. “I started a company in Durban called Samuel A May Natal (Pty) Ltd in partnership with Samuel A May, a Johannesburg-based Insurance brokering business while I was completing my BCom and my cricket career in the early 60s. After my cricket career, I sold my shares in Samuel A May – along with all the other shareholders – to a British bank, The Hill Samuel Group, and we became a wholly-owned subsidiary of Hill Samuel Pensions and Insurances (Pty) Ltd, with Hill Samuel listed on the JSE. Part of the deal was that I would come to Johannesburg as MD and I did that in 1975 and we became the largest broker after Price Forbes and MIB at the time.” Gamsy admits he did not enjoy answering to a banker in London. “So, we persuaded The Hill Samuel Group to sell us, Hill Samuel Pensions and Insurances, to Alexander Howden, a Lloyds Broker at the time. “Again, I was MD of Alexander Howden in SA, and again I had to answer to London which did not suit me. At the end of 1979 I resigned,
GIB HOLDINGS (PTY) LIMITED
// IT HAS BEEN A FANTASTIC BEE PARTNERSHIP WHICH IS NOT EASILY SAID IN THE CONTEXT OF THE SOUTH AFRICAN FIRMAMENT // suffered a two-year restraint of trade before starting Gamsy Insurance Brokers on 1 January 1982.” Like any young business, GIB performed tentatively in its early years. When the brand became established in the market, after around five years, Gamsy looked to build the team by bringing onboard current CEO Dudley Sanders. “He has been a partner and shareholder ever since,” explains Gamsy. “Then our real growth began because of Dudley’s vast experience in dealing with large Accounts at Price Forbes. “We continued to grow and, like all reasonably successful broker houses in SA, were offered deals by the bigger players but we resisted. However, because of the types of clients we were picking up, including Bidvest and Aspen, we needed to have an
international footprint. The way around that for us was to become a partner in international networks.” The management team and shareholders remain at the forefront of the business and have control over important strategic decisions. This helps keep GIB nimble and differentiates it from other corporate players in the market. “The shareholders run this company – that is extremely different from any of the larger brokers and insurance companies in this country,” states Gamsy. The shareholders have made the decision to invest heavily in the company’s number one asset – its people. GIB puts its growth down to ‘loyal, enthusiastic and energetic people’, and, while people can be one of the most difficult factors to manage in business, the company has a simple approach. “We pay well, we keep people highly motivated; we are an intense company because we are owner managed. We’re not greedy, we give out high profit shares and strong salaries – there is a lot of incentivisation within the group. To be a Level One company, we have to invest heavily in training and it can be difficult to keep the best talent but it works both ways,” details Gamsy.
It is these people that will fuel GIB’s growth in the future. Market leaders Marsh and Aon continue to control large shares of the market, but there is certainly a sentiment surrounding going local in South Africa and GIB stands proud as a very South African company. “We just want to continue growing, exponentially if we can. There is no semblance of selling down or selling out. We have a succession plan and things are good from that perspective. It’s only external factors that are a concern,” says Gamsy. With the major opportunities that still exist locally, on the continent, and through international networks, GIB’s comprehensive coverage mantra could be the answer for those looking to get involved in the industry. For Dennis Gamsy, the GIB growth journey is never-ending and he knows what is required: “Success in any walk of life is down to dedication, determination and application,” he concludes.
WWW.GIB.CO.ZA
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