FML sees balance sheet growth

FML sees balance sheet growth
Published: 07 September 2017
FIRST Mutual Holdings Limited (FML) has said shareholder assent for the acquisition of NicozDiamond has poised the company to bolster its balance sheet to nearly $300 million by year end.

Speaking to The Financial Gazette at the company's annual general meeting last week, chief executive officer (CEO), Douglas Hoto, said the acquisition would make it the largest insurance company in the industry.

NicozDiamond will merge with FML's short term insurance company, Tristar Insurance, and the merger will require regulatory approval.

"The way forward is to merge NicozDiamond and Tristar Insurance into one company. It would probably make it one of the largest short term insurance companies in the country," said Hoto, adding that FML would still be required to seek approval from the Insurance and Pensions Commission (IPEC) to consolidate the two companies.

The IPEC report for the first quarter of 2017 put NicozDiamond's assets at $31 million, third behind Alliance ($37 million) and Old Mutual's short-term insurer ($36,5 million). Tristar's assets stood at $5,1 million at the end of the first quarter.

"So we will be looking at a $300 million balance sheet from the $229 million we had by end of December," said Hoto.

FML shareholders last week voted to approve a $17,25 million rights issue which would finance the acquisition of an 80,92 percent stake in NicozDiamond.

FML intends to acquire the stake from the National Social Security Authority (NSSA) in exchange for one FML share for every 5,02 NicozDiamond shares already held.

Upon completion of the transaction, NSSA would have increased its stake in FML to 60,71 percent.

If the Zimbabwe Stock Exchange and IPEC approve the merger, FML would be required to make a mandatory offer to the 19,08 percent NicozDiamond shareholders.

Short-term insurance is currently being driven by motor vehicle insurance, which has been on the rise due to an increase in the population of vehicles in the country.

FML has also been eyeing the micro insurance sector as evidenced by a partnership with NetOne's One Cover.

The new product was launched a fortnight ago.

FML is underwriting the insurance policy which was bankrolled by BancABC to the tune to US$10 million.

Hoto said the partnership was meant to widen the company's micro insurance portfolio.

"The rationale is to reach as many people as possible who are currently not covered by funeral insurance and to take advantage of NetOne's database in a bid to create a win-win situation of financial inclusion," said Hoto.

"We just want to take advantage of the digital revolution to encourage our techno savvy clients to come on board," said Hoto.
- fingaz
Tags: FML,

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