Zimre narrows loss

HARARE - Financial services group, Zimre Holdings (Zimre), says its cost containment measures have started yielding results after the group trimmed its loss to $2,2 million from $23,1 million in the year ended December 2016.

Group chairperson Ben Khumalo said the group — which has been undergoing various cost containment measures — had also adopted fixed term contracts for executive staff and adopted a total cost to employer remuneration system in 2016.

“The improvement was mainly due to increased business retention, favourable claims experience, the positive impact of the group restructuring and cost cutting measures being implemented and reduction in share of losses from associates,” said Khumalo in a statement accompanying the group’s financials for the period under review.

However, the Zimre boss pointed out that the tight liquidity situation in Zimbabwe had resulted in challenges in premium and rental collections with downstream effects on the growth of investment income with revenue generated from property increasing five percent to $4 million compared to $3,8 million reported prior year.

In the period under review, Zimre’s total income was down 14 percent to $28,1 million as a result of a decline in gross premiums written, while net premiums earned — which accounted for 77 percent of total income — was down eight percent to $21,8 million.

Khumalo attributed the drop in net premiums earned to a soft domestic insurance market and weak local currencies in the group’s major regional markets of Mozambique and Malawi.

At $102,8 million, total assets were down seven percent compared to $110,5 million recorded prior comparable year.

The group’s domestic reinsurance business, Baobab Reinsurance also narrowed its operating losses to $700 000 from the $4,8 million recorded in the previous year on improved underwriting standards.

But, on regional reinsurance, profit for the year decreased by 69 percent to $400 000 in the period from $1,3 million in the prior year after gross premiums declined by 31 percent to $17 million.

The life and health insurance businesses gross premiums written were down 18 percent to $4,2 million while operating profit were down eight percent to $1,1 million in the period from $1,2 million previously.

Khumalo said contributions from the group’s associates Nicoz Diamond, Fidelity and CFI Holdings (CFI) remained low weighed down by losses in CFI.

“The debt restructuring and compromise settlement agreement concluded by CFI with third parties resulted in the reduction of the associate’s debt from $19,1 million to $51, million…

“It is worth noting that the losses from the operations are narrowing and some of the operations have registered a turnaround in profitability. The good 2016/17 agricultural season is expected to further enhance the performance of the associate’s agro-based units,” Khumalo said.

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