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Michael Tome Business Reporter
ZIMRE Holdings Limited (ZHL) says its Zimbabwean reinsurance cluster recorded a 91 percent growth in insurance claims largely as a result of the negative impact of climate change, which suppressed agriculture performance in the first five months of 2022.
The insurance claims received in the period were 50 percent ahead of the 41 percent recorded in the comparable period in 2021.
The 2021 -2023 farming season was characterised by inconsistent rainfall distribution and prolonged dry spells in the second half of the season which undoubtedly distressed the agriculture sector’s performance.
Simultaneously, regional reinsurance operations reported a 36 percent increase in insurance claims attributable to floods that wreaked havoc in Malawi.
There is a growing need to formulate robust insurance frameworks that incorporate agriculture in order to realise a thriving farming sector given the growing negative effects of climate change.
Insurance ensures continuity as the farmer is given a basis to restart from the effects of disasters.
“The claims experience in the first five months of 2022 has reminded us that we are in the business of paying claims.
“Local reinsurance cluster was adversely affected by agriculture claims emanating from climate change which have been on the rise. Despite these headwinds, all the units remained profitable as the group continues to focus on wallet power,” ZHL chief executive officer Stanley Kudenga told shareholders at the company’s annual general meeting.
Extreme weather conditions are becoming more prevalent in the country and the region at large hence need to shellproof the sector as it remains the mainstay of the Zimbabwean economy.
According to the Food and Agriculture Organisation (FAO), agriculture contributes approximately 17 percent to Zimbabwe’s economy, supplies 60 percent of the raw materials required by the industrial sector and contributes 40 percent of total export earnings, meaning droughts severely affect the country’s income.
In the first five months of 2022, Zimre Holdings Limited’s total revenue in historical terms rose 138 percent to $3,78 billion from $1,59 million in the comparable period last year backed by performance across the business strategic units.
Mr Kudenga told shareholders at the company’s annual general meeting that they are now moving towards a point where 40 percent of their revenue is in US dollars.
“As you know, we have got various exchange rates that one can indicate, but being a responsible operating citizen, we are using the official exchange rate to book our income,” he said.
The group’s domestic operations made a 69 percent contribution to total revenue compared to a 2021 contribution of 73 percent.
Life, pensions, and reinsurance operations led the contributions to the domestic operations at 46 percent and 39 percent, respectively.
The group’s regional operations contributed 31 percent to total revenue with Emeritus Re Malawi and Mozambique posting significant contributions to regional performance at 36 percent and 28 percent respectively.
Mr Kudenga said the regional economies where they operate were not spared from the global economic shakeups.
Total income recorded a 131 percent increase with Zimre Properties investments, maintaining a regular rental yield indexation and optimizing the value from rental properties.
Going forward, ZHL noted that the company’s ecosystem has been strengthened and the group would ensure business continuity anchored on technology utilisation.
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