Hollard Insurances, which offers car and home insurances to the public, and US-based transformational private equity fund Exigen Capital have formed a joint venture.

The aim of the move, which was announced today, is to fundamentally alter industry economics and time-to-market for insurance companies worldwide.

In a first for South Africa, the new company will be a shared service 'Business Process Utility' (BPU), which combines insurance-specific technology and expertise to offer insurers a complete back office outsourcing solution. This solution will deliver improved operating effectiveness, reduced and variable administration costs, and rapid launch of new products and new markets.

The new joint venture company, of which the name has not yet been disclosed, is immediately assuming the back office operations of its first customer - Hollard's Bank & Motor Division - with the division's current operations employees joining the new venture.

While Hollard will be the new company's first customer, its solution, which leverages a proven software suite from Exigen Insurance Solutions, is expected to scale quickly to serve additional international and local insurers.

"We expect to achieve substantial improvements in operational efficiency and cost structure by using this new venture's solution for our back office processes," said Hollard CEO, Nic Kohler. "Operating costs will be below industry average due to the transformational impact of the Exigen platform and a 'best-shoring' global delivery model. As we are bringing our own people and industry expertise to the new venture, the new joint venture company also represents a unique form of outsourcing that offers growth for Hollard and our employees."

"We also feel that the establishment of this venture is in line with the government's drive to position South Africa as an outsourcing hub. South Africa offers a high-quality, low-risk destination with lower associated costs in a mature insurance and financial services environment; which was a factor in Exigen Capital's investment with Hollard and in South Africa," said Kohler.

According to Greg Shenkman, Managing Partner of Exigen Capital, the company's goal was to create a new business model that greatly reduces operational costs for the entire industry.