Mainstreet STI

The judgment

The court's own file

ODIGy IJert/ competitiontribunal sdéuth africa fax form to Jan S. de Villiers fax Werksmans Attorneys 011 535 8790 Legal Services 44283 Competition Commission ref 02/LM/Jan11 date 15 April 2011 from Tebogo Mputle pages 4 (including this page) re Reasons This message is intended only for the use of the addressee and may contain information that is privileged and confidential. If you are not the intended recipient, you are hereby notified that any dissemination of this communication is strictly prohibited. If you have received this communication in error, please notify us immediately by telephone. Attached please find the Tribunal’s reasons for the decision in the above matter. Regards ()- Tebogo Mputle CC: Grashum Mutizwa - 44322 3 Floor, Mulayo, the dti Campus, 77 Meintjies Street, Sunnyside, Pretoria i Private Bag X24, Sunnyside 0132 Tet +27 (12) 394 3300 Fax. +27 (12) 3940169 Email: ctsa@compirib.co.za Website: http:/Avww.comptrib.co.za Od competitontribunal eek a PEE COMPETITION TRIBUNAL OF SOUTH AFRICA Case No:02/LM/Jan11 In the matter between: Main Street 796 Ltd Acquiring Firm And FirstRand STI Ltd Target Firm Panel : NManoim (Presiding Member), Y Carrim (Tribunal Member) And M Mokuena (Tribunal Member) Heard on : 16 February 2011 Order issued on : 16 February 2011 Reasons issued on : 15 April 2011 Reasons for Decision Approval

[1]On 16 February 2011 the Competition Tribunal approved the merger between Main Street 796 Ltd, to be renamed Rand Merchant Insurance Holdings Ltd (“RMI”) and FirstRand STI Lid. The reasons follow below. The Transaction

[2]The proposed transaction is a restructuring in which Rand Merchant Insurance Holdings Ltd (“RMBH’) is separating the insurance businesses in the group from the banking assets. The restructuring involves RMBH transferring the insurance assets to Rand Merchant Insurance Holdings (‘RMI’), which will become a separate company independent from RMBH. RMBH will retain the banking assets only. Once the restructuring has been completed, there will thus be two separate listed companies, with the same shareholders, the one group focusing on banking and the other solely on insurance. The Rationale

[3]From RMI’s perspective it will enable RMI to gain control of OUTsurance’s cash flows allowing the shareholders greater access to the short term insurer. The transaction will further enhance RMI’s current insurance brands.

[4]From FirstRand’s perspective the sale of OUTsurance Group is an opportunity to sell that business at a premium as well as an opportunity to restructure the existing distribution agreement between OUTsurance Group and FNB so that FirstRand’s profit share from referred homeowner insurance business will increase from 50% to 90%. The parties and their activities

[5]The primary acquiring firm is RMI. RMI is currently a wholly owned subsidiary of RBMH, a public company whose shares are listed on the JSE. Currently RBMH has a shareholding of 45% in the target, FirstRand STI.

[6]The primary target firm, FirstRand STI Holdings, is currently 45% controlled by RBMH and 45% by FirstRand.

[7]RBMH is active in the financial services industry and offers a variety of financial services including short term and long term insurance services through RMB Structures Insurance and RMB Structured Life respectively.

[8]FirstRand STI Ltd is an investment holding company that also has interests in insurance-based financial services. It owns OUTsurance, Momentum STI and OUTsurance Life which offer short and long term insurance. The relevant market and the impact on competition

[9]The product markets that overlap as a result of the transaction are the short and long term insurance markets in South Africa.

[10]RMI which already has a short term insurance business in its stable, RMB SI, will post the transaction add OUTsurance and Momentum STI to its short term insurance businesses. However, according to the Commission, RMB Sl’s activities do not directly overlap with the target firm’s activities as they serve different markets within the short term insurance sector. RMB SI is categorized as a “niche insurer” that does not sell to the general public and operates on a different business model. Nevertheless even if they are considered as competitors there are numerous other companies such as Santam, Mutual and Federal, Hollard and Clientele, to name but a few, that compete in the short term insurance market.

[11]With regard to long term insurance the overlap occurs in RMB Structured Life and MMI Holdings on the RMI side and OUTsurance Life from the FirstRand STI Ltd side. The Commission found the market accretion to be very small, less than 1%, giving RMI a market share of approximately 23% after the transaction.

[12]In light of the above, we find that the transaction would not substantially prevent or lessen competition the relevant markets. CONCLUSION

[13]There are no significant public interest issues and we accordingly approve the transaction. j di / 15 April 2011 wa presiding member DATE Name and Name concurring. Tribunal Researcher: Rietsie Badenhorst For the merging parties: | Werksmans incorporating Jan S. De Villiers For the Commission: Grashum Mutizwa Communication Result Report ( 15.Apr. 2011 13:00) x x x Date/Time: 15, Apr. 2011 12:54 7220 Memory 1X tebogo Destination Pg (s) 0115358790 Pp 4 4483 44322 no or line fail E.2) Busy er : : EL 4) No facsimile connection d max. E-mail size compotitiontribunal sheek africa fo + Jan S. de Vill fax ‘Hodeemane Attomeys 011 535 8790 Legal Services 44283 Competition Commission ref o2iLwitan41 date 16 Aprit 2014 from Tebogo Mputie pages 4 Gncluding this page) re Reasons This message is intended onlyfor the use of the addressee and may contain information that is priviegedand confidential. Ifyou are not the intended recipient, you ave hereby notified that ‘any dissemination of this communication is stfctly prohibited. If you have received this ‘communication in error, please notify us immediately by telephone. Attached please find the Tribunal's reasons for the decision in the above matter. Regards ()- Tebogo Mputte CC: Grashum Mutizwa - 44322 3" Floor, Mulayo, the di Cempus, 77 Meinfies Strest, Sunnyside, Pretoria 8 Private: Bag X24, Bunnyetde 0132 Tet 427 (2) 9943300 Fac +27 (12)386 0169 Emall: ctsa@compliib.co.za Website: hitiimwe.comphib.co0