ZB sets up re-insurance unit in Botswana


ZB Financial Holdings Limited (ZBFHL) has established a re-insurance unit in Botswana to give the group capacity to underwrite business from the southern Africa region as well as to build foreign currency reserves for the listed financial services provider, an executive has said.

ZBFH group chief executive officer, Ron Mutandagayi, said the creation of ZB Re International in Botswana would see all regional underwriting business being  done in Botswana including the Mozambican unit whose business was underwritten in Harare.

ZBFHL’s entry into Botswana comes after the group failed to make a breakthrough in Mauritius due to delays in getting regulatory approvals.

“It’s no longer Mauritius; it’s now Botswana by the way. We have registered a company, opened and paid the minimum capital requirement for the setting up of a company there.

“We hope that by the end of the first quarter of 2021 we will be able to start the regional underwriting business,” Mutandagayi said.

“The reason for offshoring in Botswana is that we continue to serve those regional customers that are concerned about the Zimbabwean domestic risk.“

We underwrite business from the SADC region especially from Tanzania, Kenya, Zambia and Mozambique to counter the risk and forex shortages in Zimbabwe.”

Mutandagayi said the group encountered difficulties in meeting the regulatory requirements in Mauritius forcing it to dump its bid to set up offices in that island nation.

Mauritius recently underwent anti-money laundering purview regulations.

Mutandagayi said ZB, therefore, turned to Botswana which has no issues and is geographically closer to Zimbabwe.

ZB Re International in Botswana is expected to be underwriting all regional business with premiums going into accounts of that newly formed company.

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.

The group has been underwriting Mozambique business from Harare since 2016 but that had not been viable ever since Mozambique suffered the devastating El Nino and Cyclone Idai and political instability, according to Mutandagayi.

By setting up a unit in Botswana, ZB will be taking all premiums in Mozambique and other southern African countries to Botswana for investments.

Zimbabwe’s firms are setting up shop offshore to raise foreign currency for local operations.

While local firms had retreated home following the use of the multicurrency regime, they are going back into the region after the government in 2019 decreed the Zimbabwe dollar as the sole currency.

In its financial results for the half year ended June 30, 2020, the group posted a 375% increase in profit to ZWL$1.13bn from ZWL$237.8m in the same period in 2019 driven by the growth in income.

Foreign sourced premiums increased to 6.8% as the reinsurance unit maintained strong relations with regional firms on the back of strong reputation and credit rating.

The insurance claims ratio softened to 24% during the HY2020 compared to 49% in HY2019 with improvements being partially explained by the general slowdown of business and social activity as a result of the Covid-19 lockdown.

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