This translated into a headline loss of R18,8m from positive earnings of R5,5m the previous year.

The poor figures were mainly as a result of the nonconclusion of a merger between Rentsure and insurance player Assupol, said Joachim Vermooten, chairman of Rentmeester and Rentsure Holdings.

He said Rentsure had wanted to merge with Assupol, but the merger was terminated by Assupol for unknown reasons, at an advanced stage.

The unbundling of the distribution network was the major cause of the loss of sales of new business on the Rentsure side, he said. This had led to the retrenchment of 20% of Rentsure staff, leaving the company with 360 staff members.

The termination of the proposed merger resulted in a material decline in new individual business written by Rentmeester, said Rentsure. The decline was the result of the termination of certain Rentmeester products, the rationalisation of the branch network in anticipation of attaining certain merger benefits and the disruption caused by having to separate certain branches that had been combined with Assupol branches on termination of the proposed merger, and the immediate departure of the Assupol management.

Rentsure said the losses had placed a strain on the capital requirements of the company and the directors were exploring alternatives in order to remedy the situation, which might have a material affect on the price at which Rentsure shares trade on the JSE Securities Exchange SA.

Rentsure said although premium income from group business showed strong growth, the losses were mainly incurred due to the decline in individual new business written during the period and due to a write down in property values of R12,6m due to changed market conditions. Vermooten said he would turn the business around in a year's time. Rentsure is 47% family owned and it is the first time that it has shown a loss since its inception in 1958.

Vermooten said Rentsure was refocusing on new products that had already been developed. One of the products was an all inclusive life policy product, another was an electronic quotation and underwriting system.

Business Day