LIVINGSTONE MARUFU
Listed financial services provider, ZB Financial Holdings (ZBFH) is expecting to complete the process of setting up a reinsurance unit in Botswana by year end after it successfully obtained regulatory approvals, Business Times can report.
ZBFH has been pushing to establish an offshore unit to build foreign currency reserves for the group.
Initially, the group wanted to establish a unit in Mozambique and later in Mauritius but failed to get regulatory approvals, forcing it to turn to Botswana.
ZBFH head corporate services Shadowsight Chiganze said the group will quicken its pace to set up the unit after getting the go ahead from regulators.
“We expect the setting up of the Botswana reinsurance unit by year end as we have been given the greenlight to do so following the approvals by the Botswana authorities,” Chiganze said.
“We settled for Botswana in consideration of a more favourable trading environment and flexible exchange control.”
It is understood that a fee close to US$2m is need for the unit to be licenced. The Botswana unit will underwrite business from the SADC region to counter the risk and forex shortages in Zimbabwe.
Chiganze said the private equity firm is assessing ZB’s capacity and was happy with the group’s progress.
The group has moved to businesses outside the country’s boarders to harness premiums in forex as it moves to grow its businesses as well as supporting the local units which are in dire need of elusive forex.
In its financial results for the 12 months to December 2020, ZBFH’s profit plummeted 45% to ZWL$1.063bn from ZWL$1.939bn in 2019.
The reinsurance segment profit was ZWL$0.086bn in 2020 from ZWL$0.113bn in 2019.
“We are quite happy with the overall performance of our reinsurance business and hopefully, current initiatives will result in increased regional penetration and further diversification of the book,” Chiganze said.
Total income for the group declined 9% to ZWL$3.3bn in the 12 months to December 31, 2020 from ZW$3.7bn in 2019 , underpinned by an 87% decrease in fair value adjustments, to ZWL$0.136bn from ZWL$1bn in 2019.
Interest income rose to ZWL$378m from ZWL$318m in 2019.
Income from commissions also fell in real terms by 8% to ZWL$1.14bn from ZW$1bn in 2019, as inflation continued to outpace rate adjustments for commissions and fees.
Operating costs shot 25% to ZWL$2.8bn from ZWL$2.2bn in 2019.
Return on equity was down to 15% from 58% in 2019 while liquidity ratio went down to 79% from 88%.
Cost to income ratio rose to 84% from 61% in 2019. Total assets for the group stood at ZWL$19bn, reflecting a 21% increase from ZWL$15.6bn in the prior comparative period.
