Harare- Zambia Reinsurance has seen an 11% growth in reinsurance revenue to 155.7 million in 2025 according to the full year financials despite net profit falling by 73%.

The company executed its core business well, grew its revenue, expanded its underwriting margins, and strengthened its balance sheet, and then watched the macroeconomic environment systematically undo a significant portion of that work

That 11% increase was driven by new business acquisition across multiple classes of reinsurance, commercial, engineering, and other lines where the company has been deepening its market position.

The reinsurance service result from contracts issued, which is the core technical underwriting margin, improved from ZMW 87.4 million in 2024 to ZMW 99.6 million in 2025. The company underwrote more business and retained a higher gross margin on that business.

Those are the fundamentals of a reinsurer executing its strategy.

However,  profit before tax fell from ZMW 32.35 million to ZMW 10.39 million, a 68% decline, while after tax, net profit collapsed from ZMW 28.46 million to ZMW 7.81 million, a 73% fall. Basic earnings per share dropped from ZMW 0.63 to ZMW 0.17, and total comprehensive income fell from ZMW 32.09 million to ZMW 13.31 million.

“This was due to foreign exchange losses arising from the significant appreciation of the Kwacha against major currencies,” the company said.

That appreciation was approximately 20% in 2025. For a reinsurer with material exposure to foreign-currency income streams, a 20% single-year move in the domestic exchange rate is not a footnote. It is an earnings event.

To understand the mechanics, it helps to understand how a reinsurer's income statement is structured. Zambia Re collects premiums from cedants, primarily domestic insurance companies passing portions of their risk to the reinsurer. A significant share of those premiums, particularly in commercial, engineering, aviation, and marine lines, are denominated in or indexed to foreign currencies, reflecting the values of the underlying insured assets.

When the Kwacha appreciates sharply, the ZMW value of those foreign-currency premium receivables falls even if the underlying dollar amount is unchanged. The same logic applies to investment assets held in foreign currency and to retrocession recoveries. The other operating income line in Zambia Re's accounts moved from a positive ZMW 17.8 million contribution in 2024 to a negative ZMW 2.1 million in 2025, a swing of nearly ZMW 20 million that sits almost entirely in the currency translation impact.

Retrocession service income halved from ZMW 34.9 million to ZMW 17.3 million. In plain terms, the company earned the same or more in hard currency terms, but when those earnings were translated back into Kwacha, they were worth dramatically less. The Kwacha did not drift upward, it moved 20% in a single year, which is a repricing of every foreign-currency asset and income stream on the balance sheet all at once.

Strip out that currency effect and the underlying operating picture is genuinely positive. The balance sheet grew as total assets increased from ZMW 209.8 million to ZMW 223.9 million, and total equity expanded from ZMW 135.5 million to ZMW 146.2 million. Cash generated from operating activities held at ZMW 10.5 million, marginally below 2024's ZMW 11.7 million but consistent.

The company is not burning cash, but generating it at a steady pace while the reported profit line is being distorted by non-cash currency translation effects. The board paid dividends of ZMW 2.52 million during the year and is recommending a further K0.07 per share at the next AGM, a dividend maintained and modestly increased despite the profit decline.

That is the clearest signal available that management views 2025's earnings compression as a currency-driven anomaly rather than a structural deterioration in the business.

The regulatory and macroeconomic context matters here too. Zambia's GDP growth accelerated to 5.8% in 2025 from 3.8% in 2024, driven by mining, energy, and agriculture. Inflation declined from 16.7% to 11.2%. The broader macro reform story, debt restructuring completed, fiscal consolidation advancing, foreign currency inflows improving, underpins a more stable operating environment for Zambian financial services than the country has had in several years.

The continued implementation of the Insurance Act No. 38 of 2021 has produced the Market Conduct, Microinsurance, and Reinsurance Regulations, minimum capital adequacy requirements are now in force, and local risk retention is being actively promoted by regulators. For a domestic reinsurer, deeper local risk retention is a direct revenue opportunity, every percentage point of risk kept onshore rather than ceded to international capacity is premium that flows to domestic players like Zambia Re.

The irony embedded in the 2025 results is that the very macroeconomic improvement that produced GDP growth and falling inflation also produced the Kwacha appreciation that crushed reported earnings. The same stability creating conditions for insurance market deepening has, in the short run, punished a company whose income streams are partially anchored in hard currency.

That tension does not resolve itself automatically. It resolves when either the Kwacha stabilises or the company restructures its FX exposure, and neither is entirely within Zambia Re's control.

For investors watching Zambia Re on the Lusaka Securities Exchange, the 2025 results demand two separate readings held at the same time. The operating business is in good health, revenue growing, margins expanding, balance sheet strengthening, cash generation consistent. If the Kwacha holds at current levels or depreciates modestly in 2026, the currency translation headwind that compressed 2025 earnings will not repeat at the same scale, and the underlying profit generation will be more visible in the reported numbers.

The risk is that Zambia's improving fundamentals continue to drive Kwacha appreciation, in which case the same structural exposure that damaged 2025 profits will continue to weigh on reported earnings regardless of how well the company underwrites. That is the variable to watch, not the underwriting performance, which has already demonstrated it is sound, but whether the exchange rate gives back any of what it took in 2025.

The honest read on Zambia Re's 2025 results is that a good business had a bad year on its income statement, and the cause was a macroeconomic force operating entirely outside its control. The underlying operations, revenue growth, margin expansion, balance sheet strength, dividend discipline, are the evidence that the business itself has not changed. The 73% profit decline is the evidence that in a year when the Kwacha moves 20%, reported earnings for a company in this position will reflect that move more than they reflect what the underwriters, actuaries, and claims teams actually achieved. Separating those two things is the work of analysis. The 2025 results of Zambia Reinsurance make that separation both necessary and instructive.

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