ZIMBABWE Stock Exchange-listed First Mutual Holdings Limited (FMHL) will establish a reinsurance holding company in Botswana as it moves to restructure its business and maximise on initiatives to raise capital.
The establishment will see the head office of the reinsurance business, First Mutual Reinsurance, being moved to Botswana as the group moves to attract partners and raise foreign currency.
This comes as its Zimbabwean unit is failing to yield due to the prevailing liquidity crisis in the country, especially remission of foreign commitments.
First Mutual CE Douglas Hoto said efforts to consolidate its efforts in Botswana will also be cemented by capital raising initiatives for NicozDiamond and associate companies, Diamond Seguros and UGI — which he said were under-capitalised.
“At the moment, they are not properly capitalised so we are looking at recapitalising them. As I indicated, for Botswana, we will move the headquarters of same so that it will be able to enhance our capital raising initiatives.
There will be no listing of companies. Only First Mutual will remain listed,” he said.
Hoto added that First Mutual Reinsurance was getting over 50% of its business from Botswana, buoyed by the favourable trading conditions in the neighbouring country.
All the business units in the six months to June 30 2018 did well except for reinsurance.
The group reported a 17% improvement in the claims ratio to 65% from 82% in H1 17, driven primarily by lower agricultural losses. The reduction in operating losses were attributed to reduced agriculture losses.
FMRE P&C Botswana recorded a 56% growth in gross premiums written driven by new business acquired from major cedants, while a strong performance in regional business contributions between regional and local market was also a leading factor.
“Positive outturn in regional business in markets such as South Africa, Zambia and Namibia operating profit went up 41% owing to a combination of lower claims ratio and higher net premium earned. Business continues to focus on premium growth both from local and regional markets,” he said.
Overall, FMHL gross premiums written went up 40% mainly driven by acquisition of NDIL, health insurance, pension and savings and life assurance.
Property rental income increased by US$0,6million to US$3,8 million compared to US$3,2 million H1 17 owing to new lettings in high-value space and increase turnover rentals in retail properties.
First Mutual Wealth achieved investment fees of US$0,6 million compared to US$0,7 million in 2017 which resulted in lower operating profit of US$0,02 million compared to US$0,1million in 2017.
Gross premiums written for First Mutual Health went up by 6% to US$29,8 million from US$28,1 million in 2017, driven by organic growth on corporate clients and acquisition of new business.
Claims ratio increased to 83,81% from 81,91% in H1 2017 as a result of increased drug prices due to shortages of foreign currency.