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Business Reporter
SHORT-TERM insurer NicozDiamond Insurance Limited showed strong growth potential in the interim to June 2013 after a 60 percent increase in profitability. The Zimbabwe Stock Exchange listed insurer defied macro-economic challenges in the economy to register a $1 million after tax profit from $654 000.
The contribution of associates to after tax profit increased by 42 percent during the period under view to $242 440 compared to the same period last year.
The group’s before tax profit had also leaped a massive 70 percent to $1,4 million compared to $852 000 achieved in the 2012 interim period.
Gross premium written jumped by 14 percent to $15,991 million while operating profit increased by 45 percent to $1,180 million in the same period last year.
Total assets grew by 14 percent to $28,5 million while shareholders funds recorded a modest 5 percent growth to close the half year at $15 million.
NicozDiamond said relative stability in the economy continued to create an enabling environment for the insurance sector with opportunities realised in such sectors as mining, telecommunication and financial services.
The group said the short-term insurance is still competitively traded and as insurance rates have not firmed to desired levels while penetration of about 3 percent remains low compared to regional and earlier country levels. “Low disposable incomes have continued to result in reduced demand for insurance. Clients are fully aware of the need for insurance, but are exercising selective insurance by largely taking up only basic covers on short periods to manage affordability,” said chairman Mr Albert Joel Nduna.
Mr Nduna said liquidity remained constrained during the first half of the year resulting in premium payment terms being negotiated by clients, adversely affecting cash flows, at the same time constricting investment growth.
He said the Zimbabwean entity contributed almost 100 percent of underwriting profit while First Insurance Company of Uganda had slight negative contribution.
NicozDiamond said its property arm, TSM and other investments contributed the balance of operating profits amounting to $501 910. The ZSE listed group said this includes profits from property and other classes of investments. In the period under review, underwriting profit grew by 127 percent from June 2012 and gave rise to the high growth rates in profitability for the group.
“This was on the back of good loss ratios, controlled operating expenses and improved retentions geared to maximise the company’s strong capital base.”
Online Reporter