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Enacy Mapakame
Listed diversified insurance firm, Zimre Holdings Limited (ZHL), continues to see resilience in its property segment despite a challenging environment supported by portfolio diversity.
The real estate sector has not been immune to the economic headwinds experienced across the economy such as inflationary pressures, currency and exchange rate volatility, and waning disposable income.
For the real estate market, the central business district (CBD) office space has been the most affected cluster as businesses vacate in favour of office parks and residential offices. Other businesses downsized operations resulting in high voids.
The commercial retail and residential segments have remained solid as demand continues to spike for both segments.
For ZHL, the property market has remained resilient, recording a 62 percent revenue growth to $11,0 billion during the first quarter period to March 31, 2024, compared to $6,8 billion during the same quarter in the prior year.
This represented a 1,172 percent increase to $6,7 billion from $0,5 billion in historical cost terms, compared to the same period last year.
“This sustained growth underscores the property market’s resilience and appeal as a preferred investment haven, driven by its value preservation qualities and ability to withstand inflationary pressures,” said group company secretary Ms Ruvimbo Chidora.
During the review period, the portfolio achieved a collection rate of 90 percent on average, slightly below the 93 percent recorded in the first quarter of 2023, while portfolio voids averaged 15 percent.
According to the ZHL, this represented a marked improvement from the 22 percent reported in the first quarter of 2023, given the ongoing trends of workspace optimisation by office tenants.
The group is upbeat that its Eagle real investment trust (REIT) project, which was granted Prescribed Asset Status during the reporting period, will drive the group’s property portfolio strategy towards high-yielding commercial and retail sectors.
Meanwhile, the group’s other businesses — the reinsurance and reassurance segment’s insurance contract revenue increased by 23 percent to $210 billion from $171,1 billion during the same period.
The growth was driven by new business acquisitions and increased market share in Zimbabwe and regional operations. The segment continues to expand its reach, making inroads into new markets across North and Central Africa.
“Geographical diversification remains a key strength, providing a robust hedge for the Group’s performance.
“Following the successful merger of the two, Botswana reinsurance entities and the recapitalisation of the Mozambique subsidiary, the segment is poised for further improvement, with enhanced underwriting capacity in new business classes,” explained Ms Chidora.
The short-term insurance business witnessed a remarkable growth in direct business, increasing from 33 percent to 46 percent in the current period ending March 31, 2024.
This led to a modest growth in insurance contract revenue, rising by 43 percent to $10,7 billion from $7,5 billion during the same comparable period in the prior year.
The segment’s profitability was enhanced due to a reduction in acquisition costs, decreasing from 31 percent to 27 percent compared to the same period last year.
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