FIRMING interest rates on the money market and a recession on the stock exchange saw Zimnat Lion reporting a modest set of results which narrowly beat market expectations for the year ended D
The company blamed the firming interest rates and the recession on the stock exchange for the depressed contribution from investment activities.
In a normal year the investment income contributes 80% to the group’s earnings with the rest coming from underwriting.
This year however the insurance firm experienced a sudden change of fortunes which saw a drastic knock in the investment income which contributed 35% to group earnings.
Managing director Oliver Mtasa blamed the high interest rates in the money market and the dip in the firm’s equity portfolio.
“We experienced low returns on the money market due the sudden rise in the interest rate late last year,” said Mtasa. “We also lost because of the major retreat on the stock market.”
Underwriting contributed 65% to the earnings due to improved business coupled with income from clients topping their policies to be adequately insured.
The group, whose marriage with Intermarket fell off last year, recorded a significant growth in the personal and fire and assets insurance. The contribution of personal insurance to the group’s income rose to 31%, up from 22% last year.
The fire and assets market also increased their share of the contribution to 29%, up 21% during the comparative period last year.
The farming sector continued on a slide due to what Mtasa said were “issues to do with the land reform programme”.
It was revealed that claims from displaced farmers had also increased on the back of disturbances on the farms.
Mtasa said the increase in the personal insurance portfolio was due to the relocation of farmers to urban areas.
He said plans were underway to streamline the workforce.
The insurer has already slashed 10 management jobs and retrenched 30 members of staff.
This year there are plans to further reduce the wage bill as part of efforts to reduce costs.
Turning to results the company reported a 423% increase in the gross written premium to $30,3 billion from $5,7 billion achieved in the comparative period last year.
Of this premium 15% came from new business written during the period under review.