Zimre Holdings Limited (ZHL) has said its future growth prospects are underpinned on regional business expansion whose full potential will be realised through competitive capitalisation.
This current focus by the group is hinged on expansion whose main thrust will be premised on developing existing markets in Southern Africa and venturing into the Western and Eastern African markets.
ZHL is an investment company with sustainable core competencies in the insurance and property sectors with subsidiaries and associates in Zimbabwe, Botswana, Malawi, Mozambique and Zambia. The group also underwrites business from other strategic markets on the African continent.
Group chief executive Stanley Kudenga said the regional business for the group remained key to future growth of the group. It contributed 51 percent of total revenue in the five months of the year.
“We however believe that the regional business’s full potential will only be realised with competitive capitalisation. A process is underway to achieve this,” Kudenga said at the company’s annual general meeting in Harare yesterday.
“You will be aware of cautionary announcements that have been published by ZHL in reference to this potential transaction.”
With increased capital, the group’s regional operations will enhance underwriting capacity, increase retention, enhance credit ratings, facilitate expansion to other markets and support overall business growth.
On group financial performance, Kudenga said total revenue for the five months to May 31, 2019 at ZWL$31,3 million was 12 percent below budget mainly due to subdued investment income and lower stand sales from Zimre Property Investments (ZPI).
The group’s insurance and reinsurance business clusters contributed 82 percent of the total revenue while the property business cluster accounted for 17 percent of the revenue.
Kudenga noted that the group remained profitable with profit before tax coming in at ZW$5,2 million, which was 32 percent above budget. “This encouraging level of profitability was mainly due to lower business acquisition costs, an overall favourable claims experience
and exchange gains,” he said.
Kudenga said the group’s business was now on a sustainable growth path on the back of continued recovery of the core reinsurance operations and growth of other sustainable revenue sources especially from ZPI.
ZHL management is however confident that the performance targets set for 2019 will be achieved given several strategies that the group is implementing.
Amid fears of the re-emergence of hyperinflationary conditions in Zimbabwe and the volatile exchange rate, value preservation will remain a key focus area for the group.
The group is also exploring and implementing expansion into existing value chains and complimentary business with synergistic linkages to the core operations to create a new revenue lines.
Leveraging on the strong balance sheet and regionally diversified business portfolio, as well as steps being taken to unlock value from investments in CFI and Zupco. Kudenga said this will be key in creating value for shareholders.
Kudenga said the full extent of the devastating effects of Cyclone Idai and Kenneth which occurred in Mozambique and parts of Zimbabwe and Malawi in early 2019 which largely affected uninsured risks is still to be assessed in terms of potential insurance claims.
“Your group is fully covered in terms of such catastrophic losses through the existing retrocession arrangements with international reinsurance companies,” he told shareholders.