Published: 27 September 2013

ZIMRE reported a respectable set of results as operating profit significantly increased to $1.6m from a loss of $1.1m in the prior period.

Profit before tax for the group improved from a loss of $1.4m to a profit of $2.3m. However, gross premium written for the year was 17% behind last year consequently total group revenue took a 4% knock to $24.7m.

The decrease in revenue was mainly driven by the devaluation of the Malawi Kwacha and the deliberate efforts to write only collectable and profitable business.

The life reassurance operations recorded a remarkable 32% top line growth to $2.3m.

The general insurance division recorded a 31% revenue reduction mainly due to the Malawi Kwacha devaluation, however operating profit improved to $0.3m from a loss of $0.6m. Revenue for the property division improved by 13% to $2.6m while the operating profit improved marginally by 5% to $1.6m.

In an investment note to shareholders, Imara Edwards Stockbrokers analyst Kudakwashe Mundowozi said: "Although the group recorded a profit, the claims and expenses ratio continues to be worrisome at 93% of total revenue.

"In our view, the slowdown in the local economy will also continue to adversely affect the local operations. The insurance industry locally remains dominated by First Mutual Holdings Limited and Old Mutual and we believe these two companies control the biggest portfolio of quality clients."

Imara maintained a sell recommendation on the counter.
- businessdaily

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