Zimbabwean reinsurance has potential to grow- Tropical RE

Tropical ReInsurance was recently conferred with a BBB+ rating by  GCR, a major milestone in the history of the Reinsurer.

 Insurance24 (24 ) I spoke to  Tropical RE Managing Director USHE Mungaraza (UM) to understand what this meant to Tropical  Re.

Find the interview below:

I24: You have received a BBB+ GCR rating. Tell us more about this

UM: Being conferred with a superior rating is a milestone achievement for the company. Generally it was an evaluation of our financial strength and claims paying ability. The rating outcome is an indication that we are able to meet our obligations as they fall due. 

I24: What does this mean to Tropical Re?

UM: The rating certification is a welcome and positive development for us as organisation. A company with a rating has a natural appeal to the stakeholders. In principle, it is a financial guarantee. With this certification, we will definitely go beyond frontiers and open barriers where there has been restrictions to trade especially in foreign markets. 

I24: What us your comment on your market outreach following this rating & will this have any impact on your footprint?

UM: As earlier alluded before, rating certification gives an automatic appeal to stakeholders. The prospects look very encouraging, a bright future lies ahead of us. Just after being conferred, we have received promising business from our clients ahead of the year 2021 renewal which is by the corner. One of the issues that has been hard doing us has been the lack of credit rating- it restricted us from signing for bigger treaty shares. The rating also allows us to access foreign markets, so there is definitely going to be an increase in our foot print on the African continent. 

I24: Reinsurance has been one of the sectors of the pension and insurance industry that has exuded some stability and resilience. What do you this has caused this? 

UM: Reinsurance by its very nature is international-it goes beyond national frontiers. Obviously the international portfolio has acted as a hedge or dilution to the adverse effects of the local environment. Such as correlation has ensured diversity and portfolio balance. 

Also reinsurance is tertiary in its nature-in as much as there is competition, at any level, reinsurance in its nature is either oligopolistic or monopolistic, each and every market player stand to benefit or have reasonable share. In terms of the market architecture, as we go up from primary to secondary and  or tertiary market, players become few. 

Reinsurance by its very nature is also a unique offering that it can stay afloat even in turbulent times because it’s a fundamental for insurance operations.  

I24: How do you position yourself in the reinsurance market and what’s your comment on the reinsurance field in Zimbabwe. 

UM: At start we were one of those small players in the market which was purely dominated by big names that had a name locally and regionally. Of late we have become a force to reckon in the market as evidenced by statistics from the office of the commission- IPEC.  We are one of the top reinsurers and definitely we are heading for the summit. As at 2nd quarter 2020, are positions 1st and 2nd based on underwriting result and technical result respectively. We control 15% of the market which positions us 3rd out of 8 reinsurers. We are now focused on coming 1st on all frontiers in line with our vision for growth. The Zimbabwean reinsurance has so much potential to grow, and as long as the economy performs well, it will become great

I24: What are the challenges that you have faced in Zimbabwe and how have you overcame them?

UM: Like any entity in the business scope, we have experienced all the macro-economic challenges that have hit the country as a whole. As earlier alluded to before, the offshore portfolio has been instrumental in hedging us. We do leverage on some clients within the region (predominantly SADC and beyond). 

High levels of prudent underwriting and analysis have been a reckoning factor. Ultimately we strive to write and maintain good risks.

I24: What can you say have been the strength that have leveraged over the years? 

UM: Superior Service delivery has carried us over the years. Insurance is all about selling a promise and we have been timeously paying out claims. Also key have been strategic alliances within the region, backing by strong partners with a superior financial power and dominance in superior markets, group synergism- our sister companies locally and within the region support us. A strong balance sheet with larger liquid cash reserves substantially in USD.  Ultimately we have a unique product offering- we are into agriculture and tourism frontiers where most players are not keen to offer.

I24: What can you say about Tropical Re in terms of portfolio strength and value preservation?

UM: Portfolio of Tropical Reinsurance is quite diverse in its nature (it cuts across business classes). However, in terms of regional and cedant (clientele) diversity, we are striving at all costs to strike the much needed balance.

I24: Going into the future, what are the key derivatives that you are looking at? 

UM: We envisage to grow to at least a 10 million US dollar business for the current year. In the next three years we target to have a business mix of 60% local and 40% foreign business.  Such goals will be achieved by paying detailed attention to our local clients’ needs and by regional expansion.