First Mutual Holdings Limited’s (FMHL) plan to recapitalise its reinsurance units has received a major boost after the Competition and Tariff Commission (CTC) approved the acquisition of a stake in the business by a Botswana-based investment management firm, Business Times can report.
Aleyo Capital will acquire a 29.1% stake in First Mutual Reinsurance Holding Company Ltd (FMRE HoldCo) which houses FMHL’s reinsurance units — First Mutual Reinsurance Company Limited (FMRE Zimbabwe) and FMRE Property & Casualty (Proprietary) Limited (FMRE Botswana). FMRE HoldCo will be domiciled in Botswana. CTC approved the transaction last month.
Aleyo will buy the stake for US$5.3m and the money raised will be utilised to capitalise FMRE Zimbabwe and FMRE Botswana, and to further boost the subsidiaries’ solvency, liquidity and other technical considerations to support expansion.
The transaction was approved by shareholders at an EGM last year and require the nod from regulators in Zimbabwe and Botswana.
FMRE Zimbabwe is involved in the provision of reinsurance services for all classes of general insurance and life and health insurance, with a stable credit rating of BBB issued by GCR Ratings.
It trades on a strong retrocession panel with ‘A’ rated regional and international retrocessionaires.
The territorial scope for the company is predominantly Zimbabwe with interests in selected African countries in pursuit of the vision to be the major reinsurance company in Africa.
FMRE Botswana is a Botswana-based reinsurance company and one of the most noticeable regional reinsurers in East and Southern Africa.
Besides the traditional segments of reinsurance, the company has a clear orientation towards underwriting of specialty lines of reinsurance in its selected markets.
Meanwhile, FMHL is mobilising funds for the opening of clinics and pharmacies during the first phase of the programme to increase business competitiveness.
The group will have partnership arrangements with suppliers in the near future and will make First Mutual Health to be a one-stop shop and a giant in the health services sector, according to FMHL chief executive Douglas Hoto.
“US$500,000 has been earmarked for the first phase of this project,” Hoto said.
First Mutual Health has embarked on a forward integration strategy whose initial phase is to expand the clinic network and open pharmacies through partnership arrangements.
He said the group’s solid balance sheet, coupled with robust strategies are expected to deliver sustainable growth and value creation for all stakeholders, despite a turbulent operating environment and the pandemic.
FMHL’s profit went up 1791% to record ZWL$2.3bn during the financial year ended December 31 2020 from ZWL$123.9m recorded during the same period in 2019 due to a massive increase in investment income.
The company recorded some marginal increases across most divisions due to the slowing down of inflation and the stability of the foreign currency exchange rate.
Gross Premium Written grew 2% to ZWL$5.9bn in inflation adjusted terms as a result of organic growth on the existing portfolio and the continuous revaluation of insurance policy values in line with inflation to ensure clients had adequate cover.
Rental income for the year amounted to ZWL$257m and was ahead of prior year by 9%.