Harare - Diversified financial services group, Zimre Holdings Limited says for the six months ended June 30, 2018 the group recorded mixed performance with the domestic insurance and reinsurance operations continuing to show resilience and sustainable recovery following rebranding and rating upgrades.
In a statement accompanying the Group’s financial results, Chairman Ben Kumalo said notwithstanding the fact that the Group has over the years built a solid base from which the regional business units are operating from, their performance in the period under review was subdued to a combination of factors.
“The existence of soft insurance markets due to relatively low economic activity compared to previous trading period, weakening of regional currencies against the US dollar in some cases and relatively low capital bases which curtailed them from absorbing the existing insurance capacity resulted in the cumulative but temporary drop in Group total income.
“The situation is expected to improve in the first quarter of 2019 when space is released for renting and higher rental yields and occupancies are expected and the Group remains on a steady path to sustainable growth and profitability,” said Kumalo.
Kumalo said as a result of the factors explained above, the Group recorded a profit for the period of $0.8 million compared to the $2.7 million achieved in the same period last year.
“The profit outturn was also adversely affected by the reduction on non-recurring revenue lines when compared to the same period last year, low investment income mainly due to low money market rates and volatility of the stock market, and a high claims experience for the Mozambican operation arising from floods in that region.”
In the period under review, Gross Premium Written (GPW) at $15.8 million was in line with that achieved in the same period last year.
Emeritus Reinsurance Zimbabwe continued on a recovery path with GPW increasing by 23 percent from $6.5 million in 2017 to $8.0 million in the period under review.
Credit Insurance Zimbabwe Limited (Credsure) recorded a 58 percent growth in GPW reflecting the positive impact of the restructuring of the business that started in 2017 when ZHL acquired a controlling stake in the Company.
However, there was a decrease in business written in Mozambique, Malawi and Zambia US dollar terms owing to among other things, the relatively lower economic activity in those markets and weakening domestic currencies, in the period under review.
Total income declined by 14 percent from $17.3 million to $14.9 million in the period under review, mainly due to the impact of the property restructuring at Zimre Property Investments Limited (ZPI).
“A deliberate and strategic decision was taken at ZPI to restructure and realign its investment portfolio which was skewed in the favour of office space situated in the CBD of major, in order to diversify into property classes with higher rental yields. This entailed the disposal of a CBD property and a conversion of another, necessitating construction and refurbishment respectively.
“The period under review coincided with the construction and refurbishment of the said property, which triggered a significant but temporary reduction of rental income from the investment property portfolio. This position is expected to be corrected in the first quarter of 2019 when rental space is released for renting.”
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