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by the adoption of multi-currency system at the beginning of 2009.
Companies have continued to struggle notwithstanding higher economic growth anticipated for this year, spurred by strong performances in the agriculture and mining sectors.
All sectors of the economy continue to scrounge around for working capital and the insurance industry is one of the most affected.
This sector suffered because just after the decade-long economic recession, there were very few people taking up insurance – and the sector was also not in a sound position to write more business.
Given the need to achieve stability and growth as well as ensuring adequate liquidity to meet obligations in investments, insurance companies have realigned their portfolios and increased exposure in less volatile asset classes.
Zimbabwe Stock Exchange-listed reinsurer Zimre Holdings recently indicated that reinsurance business is now its core business following a review of the group’s future business strategy.
Zimre decided to focus on reinsurance where it has core competencies to rejuvenate the group and achieve business growth.
The group said it is expecting to start transacting business through its reinsurance subsidiary, Southern Union Reinsurance, next year.
SURE had its curatorship lifted last year and Zimre has already started working on strategies to transform the troubled firm into a strong reinsurance company.
The subsidiary was placed under curatorship six years ago after reporting losses due to under-capitalisation.
Regulatory authorities in South Africa said then that their action had been precipitated by the need to protect shareholders.
The group said between 12 million and 15 million Rand is required to capitalise SURE, a process that was delayed by the economic crisis in Zimbabwe and the global financial crisis that rattled the world in 2008.
Its competitors in South Africa are currently enjoying a fine run, writing up to US$100 million in business per annum.
Indications from the market are that Zimre would soon be looking for partners to start a strong company in South Africa.
Zimre, which has spread its tentacles across the continent, is a holding company of financial services firms in general and life insurance, asset management, banking, stockbroking and reinsurance units.
It reported a Gross Premium Written of US$41,1 million for the financial year ended December 31 2010, declining 16 percent over the 2009 figure of US$48,9 million.
The decline in revenue in the domestic operations was mainly attributed to the de-consolidation of the results of NicozDiamond and Fidelity Life, which have now been accounted for in the group’s accounts associate and investment companies.
Meanwhile, another listed insurance firm Afre Corporation says it has started implementing a risk-conscious approach when writing new business for its insurance entities in light of the challenges in the sector.
Afre is sitting on 88 000 policies, which are more than those that are being held by other local life insurers.
In its trading update to March, Afre recorded total incomes of US$28,2 million and an operating profit of US$5,6 million.
Afre is listed on the Zimbabwe Stock Exchange and has interests in life and short-term insurance and property.
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