adminSenior Business Reporter
NICOZ Diamond’s domestic insurance business contributed 88 percent to profit before share of associates, which declined to $1,6 million for the year ended December 31, 2014 from $3,2 million in the prior year.
Nicoz Diamond chairman Albert Nduna said in a statement accompanying audited financial results for the period under review that overall profitability of the group was at $1,1 million.
“The domestic insurance business contributed 88 percent to profit before share of associates, followed by the property companies, which contributed 11 percent and the Uganda operation contributed one percent,” he said.
“The associate companies contributed negatively and took away 28 percent from the group’s profit. Diamond Seguros, the new operation in Mozambique was accounted for as an associate for the first time in the year and recorded a loss as expected.”
Nduna said while there was growth in operating profit of 17 percent, investment performance as well as the contribution of associates declined resulting in a reduction in overall profitability by 52 percent from that of 2013.
He said the regional firm’s net profit for the full-year to December fell by over 50 percent to $1,1 million on declining gross premium written and losses by associates.
In the prior year, the group posted a $2,3 million net profit.
He said the operating environment in Zimbabwe remained challenging owing to liquidity constraints and low capacity utilisation resulting in subdued economic performance for the year. “The short-term insurance sector in Zimbabwe recorded minimal growth in the year as this sector generally follows the fortunes of the economy.
“The strong and secure industry players benefited from the increase in security consciousness of the insuring public who moved their business to ore secure companies,” he said, adding that the group performed relatively well despite the economic challenges.
Nduna revealed that the group’s other operating expenses narrowly increased to $16,9 million from $16,3 million in 2013.
“Premium collections remained a challenge with increased pressure on the industry to extend payment terms to clients. This continued to halter the capacity of the insurance companies to mobilise savings and play a more significant role in the funding of national projects.
“Notwithstanding the above factors, the company was able to significantly improve its profitability from operations through prudent underwriting, good claims handling and expenses management, despite its revenue growth being marginal,” he said.
On the outlook the company plans to improve on profitability through products and distribution channel innovations and by also exploiting information technology.
“Prudent underwriting and expenses management will also continue to be focus areas,” Nduna said.
Londile Moyo
Bongani Ndlovu