• Zambia Re's profit rose 198% to K6.09 million despite a 0.4% decline in revenue
• Insurance service result improved 72%, helped by lower reinsurance expenses and retrocession costs
• Zimbabwe's ZimRe Holdings and First Mutual reported revenue growth but weaker insurance service results

Harare – Zambia Reinsurance, formerly Prima Reinsurance, has recorded a 198% increase in profit after tax to K6.09 million (approximately US$338,000) for the six months ended 30 June 2026, despite reinsurance revenue declining marginally by 0.4% to K72.36 million (US$4.02 million). The performance, disclosed in unaudited results issued on 18 September, reflects stronger underwriting economics rather than expansion in revenue, placing the Zambian reinsurer on a different earnings trajectory from several Zimbabwean insurance groups whose underlying insurance results weakened during the same period.

Profit increased from K2.04 million in the corresponding period of 2025, while profit before tax more than doubled to K8 million (US$445,000). The more revealing development was a 72% improvement in the reinsurance service result to K12.40 million from K7.21 million, demonstrating that Zambia Re retained considerably more earnings from a largely unchanged revenue base.

Revenue growth is often treated as evidence of a stronger insurance franchise, but the relationship between premium income, claims, acquisition costs and reinsurance protection ultimately determines the value generated by underwriting. Zambia Re's latest performance illustrates how improved risk selection and lower claims-related expenditure can outweigh the immediate benefits of expanding business volumes.

Reinsurance revenue eased from K72.66 million to K72.36 million, while retrocession service expenses declined 10.3% to K22.23 million. Retrocession refers to protection purchased by a reinsurer to transfer part of the risks it has accepted, helping manage exposure to large claims and concentrated events.

Reinsurance service expenses also decreased 10.9% to K37.43 million from K41.99 million, providing further relief to underwriting profitability. These reductions allowed the company to expand its reinsurance service result even as revenue remained virtually unchanged.

Expressed relative to revenue, the reported service result improved from approximately 9.9% in the first half of 2025 to 17.1% in 2026, an increase of 7.2 percentage points. This is a useful indicator of improved earnings conversion, although it should not be confused with a formally reported combined ratio.

The company attributed the improvement to underwriting discipline, claims management and reduced retrocession costs. Those explanations are consistent with the financial statements, but the sustainability of the gains will depend on the development of claims reserves, the pricing of renewed contracts and the recurrence of large insured losses.

Other operating expenses increased 33.4% to K5.84 million, while net other expenses widened to K4.40 million from K3.31 million. Management attributed part of the latter movement to foreign exchange losses associated with the appreciation of the Zambian kwacha against the US dollar.

A stronger currency can reduce the kwacha value of foreign-currency-denominated revenue and assets, making reported growth appear weaker even when underlying US-dollar business is more resilient. Zambia Re cited this translation effect and higher premiums held in reserves as explanations for its marginal revenue decline. However, the announcement does not provide a constant-currency reconciliation sufficient to quantify those effects independently.

The contrast with Zimbabwe is notable. ZimRe Holdings, which operates a regional portfolio of reinsurance, short-term insurance and life businesses, reported a 13% increase in insurance contract revenue to US$45.60 million during the first half of 2026. Yet its insurance service result declined from US$7.05 million to US$3.95 million, a contraction of approximately 44%.

This deterioration occurred despite stronger overall group profitability. ZimRe Holdings' profit after tax increased 15% to US$10.74 million, supported by higher total income, improved investment returns and regional business growth.

The distinction is important because headline earnings can strengthen even when insurance service profitability weakens. Investment income, property revaluations and other non-underwriting contributions can compensate for rising claims expenditure, but they do not necessarily demonstrate an improvement in the underlying economics of accepting insurance risk.

ZimRe Holdings' insurance service expenses rose substantially during the period, from US$29.70 million to US$41.73 million, absorbing much of the benefit from increased contract revenue. The group nevertheless maintained a growing regional franchise, with operations outside Zimbabwe accounting for 49% of insurance contract revenue, compared with 46% in the prior year. Reinsurance operations generated 77% of group insurance contract revenue.

First Mutual Holdings presented a similar divergence between insurance activity and overall profitability. Insurance contract revenue increased 6% to US$92.8 million, while the insurance service result declined 7% to approximately US$13.1 million as claims and acquisition costs increased.

Despite that deterioration, First Mutual's profit after tax surged 222% to US$19.8 million. Net investment returns rose sharply to US$13.7 million, while investment property fair value gains reached US$13.8 million, providing substantial support to reported earnings.

The comparison demonstrates why Zambia Re's operating improvement deserves attention. Whereas First Mutual and ZimRe Holdings relied partly on investment performance to support higher group earnings, Zambia Re generated a material improvement in its disclosed reinsurance service result from a relatively stable revenue base.

Fidelity Life Assurance provides a further Zimbabwean example, although its life insurance focus makes it less directly comparable. The group reported a 4% decline in insurance contract revenue to US$8.27 million, while its insurance service result moved from a US$2.87 million profit to a US$502,445 loss. Profit after tax declined approximately 74% to US$1.57 million.

Together, these results reveal differing operating conditions rather than establishing a definitive ranking of management performance. Zambia Re is a much smaller, predominantly reinsurance-focused institution, while the Zimbabwean groups have broader exposures to life assurance, medical insurance, property investments and regional operations. Product mix and claims development can materially influence their service margins.

Zambia Re's balance sheet also strengthened during the period, with total assets increasing 7.5% to K242.62 million (US$13.48 million) and shareholders' equity rising 13.6% to K154.30 million (US$8.57 million). Equity represented approximately 63.6% of reported assets, indicating a substantial accounting capital cushion, although this cannot substitute for a disclosed regulatory solvency ratio.

Operating cash generation nevertheless declined 34.6% to K3.25 million from K4.97 million. Despite stronger earnings, cash conversion therefore weakened, while closing cash and cash equivalents stood at K3.98 million compared with K4.73 million a year earlier.

The company also recorded K5.12 million in fair value investment gains through other comprehensive income, compared with K867,000 previously. These gains increased total comprehensive income to K11.20 million, but they should be distinguished from the K6.09 million profit recognised in the income statement.

Looking ahead, Zambia Re expects regulatory reforms to create opportunities for greater domestic risk retention. The progressive implementation of Statutory Instrument 72 of 2025 could increase business available to local reinsurers, potentially expanding revenue opportunities beyond the improvements achieved through cost and claims management.

However, greater domestic retention would also require sufficient capital, technical underwriting capacity and appropriately structured retrocession protection. Capturing more premiums is commercially attractive only when the risks accepted generate adequate returns after claims and expenses.

For Zambia Re, the immediate opportunity is to translate its stronger service margin into sustainable revenue growth while protecting the underwriting discipline demonstrated in the first half. Future results will need to establish that lower claims and retrocession expenses reflect durable improvements rather than favourable short-term experience.

Zimbabwe's experience provides a useful regional test. First Mutual and ZimRe Holdings demonstrate the earnings support available from diversified investment portfolios, but their weaker insurance service results highlight the importance of maintaining underwriting profitability independently of market gains.

Zambia Re has shown that flat revenue need not produce flat earnings. Its next challenge is proving that the 72% improvement in the reinsurance service result can be sustained as the business expands and takes on additional risk.

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