Despite talk of tension between FirstRand and its health company Discovery, there was no evidence of this when Laurie Dippenaar chaired his last Discovery AGM last week.
Dippenaar praised Discovery as a "fantastic company", and despite the grumblings from various quarters (disgruntled doctors, ratty regulators and crabby consumers), its financial growth prospects are still convincing.
FirstRand unbundled its 57% of Discovery to shareholders last month - though RMB Holdings, which owns 32% of FirstRand, now has 25% of Discovery.
The new Discovery chairman is Monty Hilkowitz (67), who has been self-employed in financial services since 1989 but had been MD of Liberty Life. Before that he had worked at Southern Life and Swiss Re.
It's been an especially tough year for Discovery, pockmarked by another skirmish with medical schemes registrar Patrick Masobe over the R1,7bn administration fee it sapped from the Discovery Health medical scheme last year, and an increasingly sour relationship with some specialist doctors. US business Destiny also continues to haunt the company after making losses of R102m last year.
Destiny is a tale of broken promises. In September, Discovery founder and CEO Adrian Gore committed to revealing Destiny's future by October 15 - but the deadline failed to produce clarity. In Discovery's annual report, Gore says "a preferred alternative has been identified" for Destiny, but clearly these negotiations are proving tricky.
Perhaps it's appropriate that the two companies go their separate ways, given that last week's AGM highlighted differences in the approach to governance.
At the AGM, shareholder activist Theo Botha put it to Dippenaar that he had "one set of values when it comes to FirstRand and another when it comes to subsidiaries, such as Discovery".
WHAT IT MEANS
 The RMB founders are moving back
Discovery needs to address governance
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FirstRand treats black directors (who bought into the company through its empowerment deal) as not independent - but Discovery claims black directors are indeed independent. The King 2 code of corporate governance says you shouldn't be considered independent if you get share options, as is typically the case with empowerment deals.
The theory is that a majority of truly independent directors is needed to ensure that minority shareholders are protected.
At the AGM, Dippenaar was in a conciliatory mood and immediately conceded that "we're amiss" on that score. "I think you're right. There is a bit of an inconsistency there," he said.
Discovery claims that just under half of its 16-member board are "independent non executive" directors. But if you apply a stricter test (such as the one used in the UK), only four directors could be seen as independent: Brian Brink, Steven Epstein, Hilkowitz and (appointed last week) Les Owen.
The other directors whom Discovery claims are independent either have links to FirstRand or hold shares through the empowerment deal.
Dippenaar, just as he did a week earlier at FirstRand's AGM, spoke of how technical definitions were often misleading, as directors ought to have "an independence of spirit".
There is a view that Dippenaar's cool hand will be missed. While Gore may not be a cowboy, you can imagine he wouldn't be entirely out of place on a horse out on the range. But Hilkowitz is also a man of vast experience.
Other board changes have been made. FirstRand CEO Paul Harris and financial director Johan Burger have quit the board and are replaced by RMB Holdings chief operating officer Peter Cooper and Tania Slabbert.
Cooper will replace Burger as chair of Discovery's audit committee, and it's a pity the company missed the chance to appoint an independent director to head that committee, given what's happening with Destiny in the US.
Many still think of Discovery as a medical aid business, but the company's internal balance has changed. For example, the UK PruProtection business saw a 163% jump in new business last year, and Discovery Life now represents more than 60% of the company's value.
Based on this, some analysts are expecting the share price to shoot from R27 to beyond R35 in the next year.
FirstRand, however, has been battered by (unjust) negative sentiment towards banks and (justified) concern over interest-rate hikes.
The most recent DI900 figures for September show that First National Bank has lost market share in residential home loans, instalment finance and credit cards (a 2% drop) over the past year. While this may reflect FNB's efforts to chase "quality" not "quantity," this won't cocoon it from bad debts.
There is also the messy scrap with former consultant Barry Spitz that has attracted the keen interest of the SA Revenue Service (Sars). Spitz exposed a questionable structure known as "Duisberg", set up in the late 1990s and used by FirstRand to help wealthy clients move money offshore.
Though FirstRand has since shut Duisberg, Sars is interested in whether clients used the scheme to avoid tax. When Noseweek threatened to disclose the names of people who used Duisberg, FirstRand went to court to prevent this - and failed. Clients included Gore and Datatec CEO Jens Montanana.
Though FirstRand seems vulnerable, there are many theories as to why FirstRand has opted to unbundle Discovery now. Officially, the word is that having two insurance "horses in one race" in Discovery Life and Momentum was untenable, but one theory suggests that FirstRand is "dressing down" its assets for potential sale to a foreign buyer.
In 2003 Standard Chartered considered buying FirstRand, but decided it would present too large a part of its global portfolio. Admittedly, unbundling Discovery shaves only 7% off FirstRand's market capitalisation, but it's a step towards slimming down the company.
The three founders - G T Ferreira, Dippenaar and Paul Harris - together hold 17% of RMB Holdings, and as they get older, may be on the lookout for an exit. For some time they have been reducing their involvement in FirstRand. Ferreira is stepping down as chairman, while Dippenaar will become a non executive director.
Of course, the spoke in the wheel of a major sale could be Reserve Bank governor Tito Mboweni, given his comments a few weeks back that local banks ought to remain SA-controlled.
Ranking the Analysts 2009
