Weak regional performance weighs down ZHL

PHILLIMON MHLANGA

Listed financial services group ZIMRE Holdings Limited (ZHL)’s performance in the first half of the year was pulled down by weak regional operations.

ZHL is an investment company which operates companies in the insurance and property sectors. It has subsidiaries and associates in Zimbabwe, Zambia, Botswana, Malawi and Mozambique. The group also underwrites business from other strategic markets on the African continent.

The company’s group chief executive officer, Stanley Kudenga, said a weak performance from regional operations was a strain to the group. He attributed the slowdown in operations to the absence of fresh capital. “We have regional operations but, this is where the drag comes to the group. Everything (from regional operations) was negative,” Kudenga told Business Times on the sidelines of the company’s financial results briefing last week.

“One may ask why? These were businesses formed 10 years ago and 100 percent owned subsidiaries. Our problem is that we don’t have competitive capital for these subsidiaries.’’

For the six months to June 30, 2018, ZHL’s profitability went down to $0,8 million from $2,7 million in the same period in 2017.

Total income declined by 14 percent to $14,9 million during the period in the previous year. Its domestic reinsurance operation reported a 22,74 increase in gross premium written to $8,03 million during the reviewed period compared to $6,54 million.

Total income in the half year went up 2,52 percent to $6,38 million during the reviewed period from $6,23 million reported in the same period in the previous year.

The group’s profit went down by 68,18 percent to $1,29 million compared to $4,07 million in the comparative period in the previous year. The group’s domestic insurance operations, Credsure’s GPW went up 57,82 percent to $1,42 million during the period under review from $0,9 million in the comparable period in the previous year. Earned premium for Credsure went up 10,53 percent to $0,74 million from $0,67 million in the previous year.

Profit went up by 206,97 percent to $0,96 million from a loss of $0,9 million in the same period in previous year.

But, key indicators for all regional operations were negative.

Combined GPW went down by 11,99 percent to $7,82 million during the period under review from $8,89 million reported in the same period in the previous year.

Earned premiums for the regional operations fell by 9,24 percent to $4,36 million compared to $4,81 million in corresponding period in 2017. Total income went down by 9,97 percent to $5,33 million during the period under review from $5,92 million in 2017. Operating profit decreased by 11,04 percent to $0,49 million from $0,44 million in the same period in the previous year.

Property ZPI’s total income went down by 36 percent to $1,95 million from 43,06 million in 2017. Operating profit went down 132,98 percent to $0,17 million during the reviewed period from $0,51 million in the same period in the previous year.

Kudenga also revealed to Business Times the group was looking at raising capital at Emeritus International Botswana and has appointed a Botswana company called Kumo Capital as lead financial advisors.

The group, he said, has also appointed a potential underwriter in Botswana. He, however, did not reveal the identity of the underwriter saying he was waiting clearance.

Kudenga also revealed that Minerva acquired a 40 percent stake in ZIMRE’s Zambian operation, the Guardian Reinsurance Brokers. The move, Kudenga said, would enable the group to raise offshore capital required to strengthen the capital base of the group reinsurance operations and for business expansion.

“In Botswana, we have appointed a lead financial advisor called Kumo Capital and a potential underwriter which I cannot name now because we haven’t got the approval at the moment to do so,” Kudenga said.

“We have also partnered Minerva in Guardian Reinsurance Brokers in Zambia. Minerva, which has been a key business supplier, has taken 40 percent in that unit in Zambia.”

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