Nicoz seeks new investor

HARARE - Zimbabwe's largest short-term insurance firm, NicozDiamond (Nicoz), is seeking a new investor following the collapse of recent capital-raising initiatives.

Nicoz company secretary Gloria Zaravanhu yesterday said discussions on the transaction contemplated by the firm in November last year did not materialise hence the need for new ways to raise capital.

“ . . . the company is engaged in discussions with a potential strategic investor, which if successful, may have a material impact on the company’s share price,” she said.

Market watchers have it on good record that the group wants to dispose of one of its perennial loss- making regional units and save its books while also acquiring much- needed cash.

This comes as the listed insurer’s overall profitability slumped 23 percent for the year to December 31 2015, despite a 38 percent growth in gross premium written on the back of tough economic conditions.

Nicoz acting chairperson Thembiwe Mazingi recently said the operating environment continued to be characterised by low domestic demand arising out of company closures and job losses together with liquidity constraints and low disposable incomes.

The acting chair said the diversified short-term insurer had “performed relatively well” despite the economic challenges with overall profitability for the year standing at $916 733.

During the year, the domestic insurance business contributed 131 percent to profit before share of associate’s profit/losses, followed by the Malawi unit, United General Insurance (UGI), which contributed 58 percent, First Insurance of Uganda (Fico), contributed a negative 66 percent and the property companies contributed a negative 23 percent.

According to Mazingi, Nicoz maintained its equity investments in Fico, Diamond General Insurance (DGI) of Zambia and UGI, with the group adding UGI to regional operations.

While UGI reported a “modest profit” for the period, Fico and Diamond Seguros reported losses.

“Although the share of loss of associates improved by 61 percent, their negative performance had a significant impact on the profit after tax recorded,” the acting chairperson said.

Nicoz’s balance sheet grew 34 percent during the period under review, with capital at $10,7 million — above the statutory requirement of $1,5 million.

The insurer ended the year on cash resources of about $8,4 million.

Occupancies of the group’s properties remained above market average but rental collections remained a challenge due to liquidity constraints, according to Mazingi.

During the period under review, the insurer’s total assets increased to $41,3 million from $30,8 million prior comparable period.

No dividend was declared for the year as the group felt it needed to build capital.


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