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Oliver Kazunga, Senior Business Reporter
ZIMRE Holdings Limited (ZHL) says it will use its internally generated resources to prop-up capacity on its regional operations taking advantage of opportunities in the foreign markets.

In a statement accompanying financial results for the first quarter ended March 31, 2020, the group said such markets include Mozambique where a multi-billion dollar natural gas project is being developed.

“The group is on course to provide competitive capital to regional operations mostly from its internal resources in order to increase capacity and take advantage of business growth opportunities in those markets.

“Key among those markets is Mozambique with its growth prospects from the multi-billion US dollar natural gas projects, which were on the verge of being commissioned,” it said.

“The group reinsurance operations started the year on a positive note with increased treaty participation especially from top tier cedants in the domestic market on account of a relatively strong balance sheet, excellent service delivery and the increasing Emeritus brand equity.”

Accordingly, the group expects both its domestic and regional entities to contribute the bulk of its total income in 2020. However, due to the tight liquidity situation and other challenges, premium collections were subdued, thus slowing down investment portfolio growth across the group, said Zimre.

In 2017, the group announced increasing its stake in Credit Insurance Zimbabwe Limited (Credsure) to 80 percent following a successful rights issue.

“In the period under review, Credit Insurance Zimbabwe Limited (Credsure) recorded above budget performance in most key result areas as well as signifcant growth compared to the same period last year.

“The improvement is credited to its focus on offering specialised products to the market especially to the tobacco sector and infrastructure development projects through underwriting management agents,” it said.

In historical cost terms, ZHL said profit for the period was 439 percent above budget on account of the significant growth in topline performance, favourable claims experience (15 percent claims ratio) and controlled operating expenses. Due to the depreciating local currency against the United States dollar, the company is experiencing an increase in the demand for cover in harder currencies.

“The industry is working with IPEC (Insurance Pensions Commission) to reintroduce US dollar denominated policies following their suspension in 2019 (Ipec circular 13 of 2019),” said ZHL.

On rental income performance, the group said it was on budget on account of the quarterly rental reviews being implemented, reconfiguration of existing rental space for other uses in line with market demand and move towards turnover based leases. The company obtained a waiver to charge some of its services in hard currencies.

“However, the reduced capacity of tenants to service lease contracts due to the mounting economic challenges, which became more pronounced in March 2020 with the outbreak of the Covid-19 pandemic, resulted in increases in void space and debtors,” it said.

The group reinsurance operations’ capital positions met or exceeded the minimum statutory levels in the first quarter.

Some regional operations were within the transitional periods set by regulators for compliance with new minimum capitalisation levels. On the outlook, ZHL said the outbreak of the Covid-19 pandemic, which became more pronounced globally towards the end of the first quarter has resulted in the downward revisions of global economic growth projections due to the severe disruptions to economic activity. Economic recovery is expected to be slow and more so in developing economies where governments, in the absence of assistance from international fnancial institutions, have limited capacity to provide fiscal and monetary stimulus packages to protect businesses and revive economic growth.

“The resilience of the group and the Southern African region shall be tested in the second half of 2020.

“ZHL shall lean heavily on its financial strength buttressed by its sizeable property portfolio to weather the storm and preserve shareholder value.

“The strategic focus shall be responding to the effects of the Covid-19 pandemic and implementing short-term survival strategies including balance sheet preservation and cost control.

“The group is also putting in place measures to ensure the safety of its employees and stakeholders without compromising the ease of doing business,” it said. – @okazunga.