First Mutual sets up reinsurance company


Eric Chiriga

FIRST Mutual Life Assurance Company Ltd (FML) has established a reinsurance company, African Reinsurance.



s-serif”>”The launch of African Reinsurance is motivated by the fact that asset values and insurance covers are increasing at a rate far beyond the capacity the local market can accommodate,” group chief executive officer Norman Sachikonye said.


He said reinsurance companies were needed in Zimbabwe especially considering the economic phase the country is currently experiencing.

FML, which is looking forward to raising new capital of $52 billion through a rights issue and private placing, intends to use part of the funds to capitalise the reinsurance company.


“We will channel part of the funds raised towards the capitalisation of African Reinsurance company,” he said.


FML and Trust Holdings Ltd (Trust) have agreed to go into partnership inorder to enhance their business prospects.


“Trust has agreed that FML acquires additional shares in Trust Holdings and become an anchor shareholder,” Sachikonye said.


African Reinsurance has been established as a joint venture with Trust.

Trust is expected to contribute to the capitalisation of the new venture for an equity interest of approximately 40%.


FML will increase its current 9% shareholding in Trust to a level of up to 25%.


Sachikonye said the strategic partnership of these two leading institutions was highly synergistic and was ex-pected to sig-nificantly en-hance shareholder value.


“FML and Trust will exploit cross-selling and up-selling opportunities as well as each other’s distribution channels,” Sachikonye said.


The new reinsurance company will consolidate FML’s position in Zimbabwe’s vibrant insurance sector.


“Regional policies are being actively considered in order to diversify and hedge against adverse local factors,” Sachikonye said.


FML is currently expanding into the region.


This will contribute to product and earnings sources and ultimate-ly enhance shareholder value.


The anchor for FML’s regional expansion will be African Actuarial Consultants.


Sachikonye said mar-keting efforts in Botswana, South Africa, Malawi and Zambia had shown solid market opportunities.


FML also intends to establish an international subsidiary, First Mutual International Ltd (Botswana), to spearhead regional activities.


“This subsidiary will raise capital for international ventures and will work closely with the local strategic partner to pursue these regional opportunities,” he said.


FML intends to list on the Zimbabwe Stock Exchange by the end of this year.


There are currently five reinsurance compa-nies operating in Zimbabwe, namely Zimbabwe Reinsurance Company Ltd (Zimre), Southern African Reinsurance Company Ltd (Sare), Intermarket Reinsurance Ltd, Swiss Reinsurance Company and MunichRe.

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