ZIMRE Holdings Q1 2017 profit up 48% despite declining revenues
HARARE, Zimre Holdings Limited recorded a 48% increase in profitability in the first quarter of 2017 to $1.35mln compared to $0.92mln in 2016 despite revenue declining 13% to $6.52mln.
Group chief executive officer Stan Kudenga told a shareholders meeting that profitability was driven mainly on the continued recovery at Baobab Re, focus on prudent and selective underwriting, improved performance from associate companies and subdued claims experience across most Group reinsurance operations.
Kudenga said the group is now positioned to be a focused and diversified investment holding company with anchor investments in insurance property and agro-industrial business.
He said this is mainly attributed to the restructuring exercise which has resulted in lowering operating expenses and aligning costs to revenue.
The restructuring also entailed exiting from investments with no strategic fit to the new vision as well as consolidating Group investments in key segments.
In terms of country contribution to Group total revenue for the quarter, Zimbabwe had the highest at 62% followed by Malawi at 13%, with Zambia and Mozambique at 10% each and Botswana at 5%.
Kudenga said revenue achieved for the period was below expectations largely due to the soft domestic insurance market and the impact of loss of value of the regional currencies against the US Dollar.
In addition to that, Emeritus South Africa was not trading as it is winding up its operations while the underperformance of property operations also weighed down the revenues.
The CEO said the turnaround and momentum gained in performance in the first quarter has been sustained in the second quarter.
Commenting on the progress on the establishment of Emeritus International Reinsurance Company, Kudenga said all the Exchange Control approvals for setting up the Company were obtained.
Emeritus International is an offshore company registered in Botswana and operating in the Botswana International Financial Services Centre accredited zone.
“Restructuring of the shareholding that will result in the entire group Reinsurance operations being owned by and rebranded to Emeritus International is in progress,” he said.
Kudenga added that Emeritus International will be used by the group as a vehicle to mobilise international capital required to further strengthen the regional operations, enhance credit ratings and advance the Group’s domestic and regional footprint.
The group’s long term plans are to list Emeritus international on the Botswana Stock Exchange (BSE).
Kudenga also said Zimbabwe Exchange Control Approvals have also been received to disinvest from
Continental Re Nigeria and use the proceeds to recapitalise Mozambique Reinsurance Company.
