LIVINGSTONE MARUFU
ZIMRE Holdings Limited (ZHL) is using its position in regional markets to protect itself from the economic downturn that has hit some of its units.
ZHL currently conducts business in Malawi, Zambia, Botswana, and Mozambique.
In a statement accompanying the 2022 financial results, board chairman Desmond Matete said the operating period was characterised by various unprecedented challenges in the different regions and sectors that the ZHL group operates in.
“The regional operations contributed 43% to Gross Premium Written [GPW] in 2022 compared to 41% in 2021 and thus remain key strategic investments which provide diversification value to the group,” Matete said.
“The group recorded positive topline and bottom-line growth despite the turbulence and volatility of the various economies we operate in.”
Matete said the group delivered positive results, benefiting from the resilient performances of its underlying businesses despite the significant challenges in the group’s operating jurisdictions.
Total income for the group in the reviewed period stood at ZWL$39.5bn, reflecting a 9% increase from ZWL$36.3bn achieved in 2021.
The growth was driven by overall positive investment returns, strong top-line growth in premium income particularly in Botswana and Zambia and growth in the life and pensions business domiciled in Zimbabwe.
“Investment income growth was underpinned by fair value gains on investment properties largely driven by the exchange rate movements. GPW was ZWL$20.4bn, a 13% increase in inflation adjusted terms on the back of real business growth in the region and from domestic operations,” he said.
Inflation adjusted group total expenses grew by 36% from ZWL$22.1bn recorded in prior year to ZWL$30.1bn in the current year and in historical cost terms, expenses grew by 457% to ZWL$42.3bn in 2022 from ZWL$7.6bn in 2021.
The spike in expenses was on account of unprecedented high claims experience in the non-life reinsurance entities as a result of climate change effects.
The group will be improving its underwriting practices using innovative technologies to counteract climate change effects on its key reinsurance business lines, Matete said.
Local non-life reinsurance operations were hit the most by high agriculture claims resulting in a claims ratio of 71%.
ZHL operating and administration expenses spiked due to exchange rate driven inflationary pressures experienced primarily in Zimbabwe.
The group sustained profitability in inflation adjusted terms, recording profit after tax of ZWL$4.1bn and the growth is on account of fair value gains on financial assets and investment properties as well as strong top-line
growth in some business units. Total assets for the group increased by 51% in real terms from to ZWL$122.2bn as at December 31 2022 from ZWL$80.7bn as at December 31 2021 and the asset growth was driven by investment properties and equity investments which account for 67% (2021: 63%) of the Group’s total assets.
He said the group’s healthy balance sheet position was evidence of its resilience and commitment to provide its stakeholders with “security, growth and profitability”.
While the Zimbabwean reinsurance and reassurance operations suffered knocks from tobacco and Covid-19 claims, ZHL’s regional business units continue to be key strategic investments as evidenced by their 43% contribution to GPW in 2022. The short term insurance cluster recorded notable growth from prior year as short term insurance and broking contributed a total of 6% to total revenue up from a total 4% in the prior year.
The short term insurance broking arm (WFDR) drives captive insurance business from the market as well as driving business to the short term insurance cluster. Life and pensions experienced a higher claims ratio of 41% in 2022 from 38% in 2021 emanating from retrenchments and exit pay-outs from pension funds.
The property portfolio recorded a 45% growth in rental income from prior year in inflation adjusted terms despite subdued rental growth and increasing commercial property rental voids in the market. “The group has initiated various infrastructure development projects to be housed under the Eagle REIT to diversify the property portfolio and enhance stakeholder value,” Matete said.
