Grand Reinsurance and Botswana Insurance Company achieve increased profitability in H1 2017, as Zimnat decline
Insurance24 Reporter
HARARE, Masawara PLC’s insurance cluster registered a marginal 0.53% decline in after tax profit for the interim period ended 30 June 2017 to $1.16 mln compared to $1.19 mln same period in 2016 largely as a result of a decline in Zimnat Life Assurance Group profitability.
During the period, the Group’s insurance continuing operations were in mixed performance, with the
Botswana Insurance Company Limited and Grand Reinsurance Company (Private) Limited in improved performance while the Zimnat Life Assurance Group registered a decline.
Zimnat Lion Insurance achieved an after tax profit of $825 000 which was a 8.03% decline from $897 000 in 2016 comparable.
Zimnat Life Assurance profitability declined 39% to $1.66 mln compared to $2.72 mln same period in prior year. Additionally, Minerva Risk Advisors saw profitability declining to $778 000 from $878 000 in prior year.
At Zimnat Lion, the claims ratio increased to 50% from 42% in 2016 while at Zimnat Life the claims ratio declined to 23% from 25% during same period last year.
Meanwhile, Botswana Insurance Company and Grande Reinsurance registered improved performance which was offset by the decline in performance of the Zimnat Life Assurance Group.
Grande Reinsurance saw profit after tax increasing a massive 93.69% to $1.50mln compared to $777 000 same period prior year comparable with the claims ratio largely flat on prior year at 23%.
Botswana Insurance registered a 51.91% increase in profitability to $1.39 mln compared to $915 000 in 2016. The company had a claims ratio of 45% which was a decline from 55% in 2016.
Consequently, group after tax profit, incorporating the discontinued Lion Assurance Uganda amounted to $6.675 mln, a 1.23% decline from $6.758 mln during the interim period of 2016.
Masawara is an investment company focused on acquiring interests in companies based in Zimbabwe and the southern African region. The Group classifies its operations into different clusters
i.e. insurance, hotels, agrochemicals, property (Joina City) and technology clusters.
On Hotels, the performance of Cresta Zimbabwe improved by $0.2 mln when compared to the same period last year as a result of cost reduction initiatives.
Occupancy for the current six month period was 52% and flat on prior year and revenue per available room (RevPar) declined from $37 during the prior half year to $33 as a result of continuing price wars in the industry.
The Group’s revenues at Sable earned by the business therefore remain depressed resulting in a loss before tax of $1.5 mln compared $1.8 mln.
The agro chemicals segment is comprised of investments in Sable Chemical Industries Limited (“Sable”) and Zimbabwe Fertiliser Company Limited (“ZFC”).
At Joina city there was a 6% decline occupancy mainly driven by the unit’s decision to cancel the lease contracts of non-performing tenants.
Although the ratio of debtors as a percentage of revenue increased by 10%, this ratio is expected to improve as a result of the unit’s strategy which focuses on retaining performing tenants.
However, the Group recorded a decline in cash and cash equivalents of $0.8 mln with the decline driven by cash utilized in investing activities which amounted to $9.3 mln.
During the period, cash flows from operations were at $7.4 mln compared to $1.4 mln by June 2016 with bulk of it being investment income.
Cash utilised in investing activities at $9.3 mln was an increase from $596 000 in 2017 and this was mainly a result of the purchase of financial instruments amounting to $15.4 mln.
However, net cash from financing activities at $677 000 includes proceeds from borrowings of $2.4mln, the repayment of borrowings of $1.5 mln and the payment of dividends to non-controlling shareholders amounting to $0.2 mln.
The group’s total assets for the interim amounted to $313 mln compared to December 2016: $288 million. Of these assets $297 mln were attributable to continuing operations.
Masawara’s total liabilities amounted to $205 mln and of these liabilities $195 mln were attributable to continuing operations.
