Integrated financial services group, Zimre Holdings Limited said it injected $2 million into Credit Insurance Zimbabwe (CredSure) after it snapped a majority stake in the insurance firm.
Zimre increased its shareholding to 80 percent in the struggling CredSure early last year following a successful rights issue meant to recapitalise the business.
Stan Kudenga, Zimre group chief executive officer, said performance in 2017 showed gravitation towards a turnaround with the narrowing of losses.
“Measures to sustain future performance include continuously reviewing and strengthening the capital base, capitalising on brand strength, that is, provision of export and domestic credit, bond and guarantee insurance products as business growth strategy,” he said in the group’s annual report published last week.
CredSure was formed in 1965 and used to provide credit insurance services only, but diversified into general insurance in 2007.
The insurance company – a specialist provider of construction bonds and guarantees – was also formed to facilitate export finance by cession of credit insurance policies to financial institutions and suppliers.
Kudenga said CredSure will soon be going through a restructuring exercise aimed at realising operational efficiency and growing market share through the underwriting management agencies structure. The latest development comes as the listed insurance giant’s total income increased by 17,6 percent from $30,9 million in 2016 to $36,4 million in 2017. Zimre chairman Benjamin Kumalo attribute the increase of total income to an improvement in revenue from property sales at Zimbabwe Property Investment (ZPI) and steady recovery in the core reinsurance operations due to the ongoing restructuring exercise, growing market confidence and improvement in underwriting standards.
“In response to the positive and significant growth in total income, profit for the year improved from a negative $1,5 million in 2016 to $5,8 million in 2017. The significant turnaround in the bottom line performance was mainly attributed to the significant turnaround at Baobab Re which adopted and implemented a prudent and selective underwriting strategy and profit from disposals arising from the investment portfolio restructuring exercise,” he said.
Kumalo also attributed the return to profitability to write-offs of reinsurance legacy liabilities and favourable claims experience in the regional markets where claims declined by 31 percent from $4,8 million in 2016 to $3,3 million in the year under review.
“And ongoing review of structures for the attainment of operational efficiency, and improvement in the management and alignment of costs to revenue,” said Kumalo.
In the period under review, Zimre’s cash and cash equivalents increased by 120,4 percent sfrom $11,1 million in 2016 to $24,4 million due to positive cash flow from group operations and enhanced liquidity from balance sheet restructuring and disposals.
“At $106 million, total assets increased by 2,8 percent as at December 31, 2017 compared to the same period in 2016. Shareholders’ equity increased by 24,9 percent from $39,8 million in 2016 to $49,7 million in 2017 mainly boosted by profit for the year and the Group’s initiative to increase its shareholding in ZPI,” Kumalo added.