Nicozdiamond moves closer to de-listing as FMHL finalizes offer to minorities

By Insurance24

HARARE –First Mutual Holdings (FMHL) now with a controlling stake in short term insurer at 80.92% is working on an offer to minorities which is expected to close by June this year.

After completion of the acquisition of the majority stake, FMHL is now moving to acquire the remaining 19.08% as required by the Zimbabwe Stock Exchange (ZSE) listing requirements.

“We are now working on an offer to the minorities and it will close by June,” Group chief executive officer Doug Hoto told Insurance24.

He said the merging process of NDI with FMHl’s Tristar Insurance has already started and this will strengthen the company’s balance sheet and consolidate the market leadership position.

“Strengthened balance sheet will enable the company to retain more business and widened product offering for clients,” he said.

Hoto said post the offer to minorities; every other process will follow which include the de-listing of Nicozdiamond from the local bourse.

Nicozdiamond is currently among the 5 listed insurers but after de-listing may retain its listing under the wider FMHL group.

Hoto said the group is currently evaluating investment opportunities in particular across NDI regional operations which are currently undercapitalized despite making good returns during the 2017 financial year.

“Assuming, we have done and see opportunity, will capitalize the operations from here but this will also require approval from the Central Bank,” he said.

Both United General Insurance (UGI) Malawi and the Diamond Segros in Mozambique rebounded to profitability during FY17.

During the period, Gross Premium Written (GPW) for the group increased 8.6% to $40.19 mln from $36.99 mln last year as both the company and UGI Malawi achieved modest growth during the year.

NicozDiamond Insurance (NDI) contributed $31.48 mln to overall GWP which was 6.5% increase from $29.56 mln in prior year, while UGI on its rebound grossed $8.71 mln in GWP, a 17% increase from $7.43 mln last year.

 

Healthy insurance business and property and casualty segments lift FMHL in 2017

HARARE, First Mutual Holdings (FMH) gross premium written (GPW) for the year ended 31 December 2017 grew 7% to $124.92 mln from $116.48 mln in 2016 largely driven by strong growth by two segments, the health insurance and property as well as the casualty.

In a statement of the financials, group chairman Oliver Mtasa indicated that the healthy insurance business and property and the casualty segments grew 9% and 19% respectively.

“The growth in the two segments was however offset by the 8% decline in pensions and savings business arising from lower single premiums in 2017 compared to 2016,” he said.

He added that the decline in single premiums is in line with the general slowdown in retrenchments during 2017 compared to 2016. Additionally, GPW amounting to $2.7 mln is attributable to the newly acquired Nicozdiamond for the month of December only.

Group rental income was 4% lower than prior year largely as a result of decline in rental income. The group operating profit of $8.1 mln for the year was lower than 9.3 mln in 2016 mainly due to the impact of unusually high agriculture business claims which were ameliorated by improved performance in other units. Overall, group profit for the year amounted to $12.2 mln, an increase from $9.3 mln in 2016.

CHIEF EXECUTIVE OFFICERS REVIEW OF OPERATIONS

Group chief executive officer Doug Hoto said the company delivered on its core pillars of risk management, wealth creation and wealth management and this is becoming increasingly important in a dynamic environment.

HEALTH INSURANCE

First Mutual Healthy Company (FMHC) achieved a 9% growth in GPW to $56.9 mln compared to 52.2 mln in prior year driven mainly by the acquisition of new business and organic growth on corporate clients.

Hoto said the acquisitions are reflected in growth in membership which stood at 118 590 as at December 2017 compared to 108 811 members same period in 2016. Claims also increased 9% in line with the growth in business whilst the claims ratio remained constant at 79%.

According to Hoto, the business launched a customer based interface mobile application to improve customer convenience. He added that through the biometric claims administration, the business managed to enhance its efficiency on claims processing and settlement.

LIFE AND PENSIONS BUSINESS

First Mutual Life Assurance saw GPW declining 4% to $35.3 mln for both Life Assurance and Pensions and Savings business. Pensions and Savings contribution to GPW was at $20.6 mln, 8% lower than $22.5 mln in 2016 largely as a result of a 30% decline in single premiums which normally arise through the setup of pension’s annuities and preservation funds when employees leave employment through either retirement, resignation or retirement.

“This decline in premiums was, however mitigated by growth in individual Life Assurance cash, accumulations that were 16% ahead of last year. Claims benefits also went down by 13% in 2017 as a result of the general decline in retrenchments countrywide compared to 2016,” Hoto said.

Life Assurance

The business grew 4% to $14.7 mln compared to $14.1 mln in 2016 with the increase mainly driven by e-FML whose GPW contribution to the business went up 44%. Claims for the shareholder risk business were 3% ahead of 2016 and this was due to the growth in business particular from e-FML.

According to Hoto, the Property and Casualty segment GPW went down 1% to $17.1 mln from $17.2 mln and this was largely due to a 69% decline in regional business. He said the decline was partially offset by the growth in local business due to higher agriculture business claims related to severe hailstorms which saw the claims ratio at 68% compared to 48% in 2016.

The Health and Life Segment GPW was lower 14% at $2.2 mln with the Health business premium 65% below prior year as a result of the deliberate management decision to scale down on regional health business due to higher than expected claims and difficulties in collecting the premium. As a result, the loss ratio improved from 61% to 52%.

In Botswana, the business acquired new business from both local and regional cedants resulting in being 31% above prior year.

Tristarinsurance GPW increased 31% to $4.8 mln compared to $3.6 mln in 2016 and the growth was driven by new business owing to improved market confidence following the recapitalization of the company.  The dominant classes continue to be motor, fire and accident with GPW of 63%, 19% and 11% respectively.

Meanwhile, Hoto said the group is positioned to beyond delivering value and during 2018, First Mutual will make the mandatory offer to NDIL minorities after which the group will consolidate the operations of the recently acquired NDIL and Tristarinsurance.