First Mutual Holdings Limited’s (FMHL) reinsurance unit in Mozambique, Diamond Seguros, has embarked on a capital raising initiative to meet the required US$900 000 minimum capital threshold, Business Times can report.
Group CEO Douglas Hoto said the group intends to follow its rights and underwrite the capital raise.
He said proceeds will also finance new lines of business.
“The company embarked on a rights issue in 2021 to raise approximately US$900 000 capital to meet the enhanced regulatory minimum capital requirements.
It will also allow the company to venture into new lines of business such as health insurance and micro insurance as well as expand its network in line with its growth strategy.
The group intends to follow its rights and underwrite the capital raise,” Hoto said.
He said the insurance regulations in Mozambique will allow Diamond Seguros to underwrite health insurance on the existing licence.
The FMHL group already has competencies within the group for this business through First Mutual Health, Hoto said.
He said focus will be on developing this opportunity in order to expand revenue streams for the group and part of the capital being raised is therefore targeted for this.
The group will be deploying technical, technological and human resources to execute this initiative, Hoto said.
FMHL’s profit skyrocketed 1791% to ZWL$2.3bn in the 12 months to December 31, 2020 from ZWL$123.9m in the prior comparative period 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 from ZWL$5.8bn in 2019.
Rental income for the year amounted to ZWL$257m and was ahead of prior year by 9%.
The real growth, relative to prior year, was due to quarterly rental reviews and increases in occupancy rates in retail and residential properties.
The group achieved investment income of ZWL$346m for the year under review compared to an investment loss of ZWL$1.8bn in 2019.
The investment gains were driven by fair value gains on listed and unlisted equities in line with the general performance of the ZSE Industrial Index.
Total assets for the group stood at ZWL$15.4bn from ZWL$10.8bn in 2019.