ZIMRE Holdings Limited (ZHL) has overturned its loss-making position by $4,36 million for the financial year ending December 31, 2017 on the back of cost reduction and an improvement in incomes from its key operations.

For the 2017 period, ZHL registered a profit of $5,82 million from a loss of $1,45 million recorded in the 2016 financial year.

In a statement accompanying ZHL’s financial results for the year ended December 31, 2017, ZHL chairman Benjamin Kumalo said total income increased by 20% to $37,2 million for the period under review from $30,9 million in comparative 2016 year contributing to profits.

“In response to the positive and significant growth in total income, profit for the year improved from a negative $1,5 million in 2016 to $5,8 million in 2017. The significant turnaround in the bottom line performance was mainly attributed to the significant turnaround at Baobab Re which adopted and implemented a prudent and selective underwriting strategy; profit from disposals arising from portfolio restructuring exercise; write-offs of reinsurance legacy liabilities…,” he said.

“…favourable claims experience in the regional markets where claims declined by 32% from $4,8 million in 2016 to $3,3 million in the year under review; and ongoing review of structures for the attainment of operational efficiency, and improvement in the management and alignment of costs to revenue.”

Kumalo said ZHL was consolidating and strengthening its capital base of reinsurance operations, rebranding of reinsurance operations, property portfolio restructuring through new asset classes and adoption of innovative business acquisition models to sustain the upward momentum.

This would be done through the adoption of an “aggressive debtors’ management and collection policy which is expected to result in the narrowing of the levels of the debtors’ figures and improve investment income performance”.

From its different portfolios, total insurance income experienced the highest growth of 4,36% to $24,87 million for the period under review from a 2016 comparative of $23,82 million.

This growth was attributed to ZHL’s disposal of its 30,03% stake in NicozDiamond Insurance to the National Social Security Authority at a price of $7 million during the period, a disposal of which strengthened ZHL’s reinsurance operations.

ZHL also disposed of its 62,23% stake in Colonnade Reinsurance Company Limited.

The improvements in overall profits led to an increase in earnings per share of over 800% to 36 cents from a negative 5 cents allowing the company to report a final dividend of $1,1 million.

In terms of total expenditure, the restructuring and cost cutting measures across ZHL’s different portfolios led to a reduction of expenses by 5,34% to $31,71 million from $33,49 million recorded in the 2016 comparative.

“We anticipate growth in disposable incomes and consumption trends of both middle income classes thereby leading to increased demand for discretionary products such as insurance. In the short term, the group’s strategic focus will be to continue consolidating and strengthening its insurance and property businesses from internal resources for growth,” Kumalo said.