HARARE, August 24 (The Source) – Zimbabwe’s largest short-term insurer, Nicoz Diamond on Wednesday said its net profit for the half year to June 30 dropped eight percent to $1,2 million compared to $1,3 million previously after contributions by associates weakened.
Chairman James Karidza said while the remainder of the year is expected to remain subdued, the company plans to acquire new business but will focus on managing associated costs as well as other operating costs.
During the period, gross premiums written grew three percent to $22,9 million compared to $22,4 million in 2015 previously. Operating profit grew 52 percent to $1,87 million from $1,23 million, mainly to 15 percent savings on operating expenses.
The Zimbabwean operation recorded a growth of 10.4 percent and remained the largest contributor to revenue. Claims rose 4.8 percent as the company processed heavy fidelity guarantee claims and growing claims in other classes during the period.
Profits from insurance underwriting amounted to $1,35 million.
The Zimbabwean unit’s underwriting profit increased 83 percent compared to prior year while the Malawian operation reported an underwriting loss in the period due to the impact of the Malawian Kwacha devaluation.
In Uganda, the operation had a positive contribution to underwriting profits. Managing director Grace Muradzikwa told the shareholders at the company’s annual general meeting in July that the company plans to dispose of the Uganda operation, First Insurance Company (FICO) because of low returns and a difficult operating environment.
Karidza said the final phase of the Diamond Villas housing project, which resumed in May, is expected to be complete by end of September but demand for sales has been low given the limited and expensive mortgage facilities available in the market.
But the company is realizing good yields from the completed units, he said.
“The group will endeavor to maintain profitability for the 2016 financial year but the company is mindful of the developments on the property market in Zimbabwe that might have negative impact on property valuations at year end,” said Karidza in a statement accompanying the results.
In a post half year update, operations manager Noel Manika told analysts that Gross Premiums Written to July 16 were up by 3,7 percent to $26,5 million compared to $25,5 million in the same period last year.
“Up to July, we have seen in terms of the top line growth of 3,7 percent which we are happy about given that within the local market we have seen the income going down but not for Nicoz Diamond,”said Manika.
Retention ratio for the half year stood at 65 percent and the group is targeting to reach 70 percent in a mid term plan.
“We are far ahead in terms of retention ratio. At Nicoz Diamond we are retaining more which is a much healthier position… As Nicoz Diamond we want to get at least at 70 percent,” said Manika.
The group’s claims increased by 32 percent to $4,9 million in the first six months largely driven by motor section with claims worth $3,3 million.
“What is important is to focus on the performance of our biggest class which is motor and our main focus area for now is to insure that claims for the motor book remain under control,” said Manika.