HARARE – Short term insurance firm, NicozDiamond’s merger with Tristar Insurance has already started following its successful acquisition by First Mutual Holdings Limited last year.
Last year, FML acquired an 80 percent stake in NicozDiamond. In line with this, NicozDiamond will merge with Tristar before it delists from the Zimbabwe Stock Exchange (ZSE).
In a statement accompanying group results, James Karidza said the process to merge the two entities was already underway.
“Following the acquisition of an 80, 9 percent stake in the company by First Mutual Holdings Limited
(FMHL), the processes to see the merger of NicozDiamond and Tristar Insurance have been started and more information will be provided to shareholders in due course,” he said.
The National Social Security Authority (NSSA) is the biggest shareholder in both NicozDiamond and FML and the merged entities are therefore expected to enjoy the benefits of having NSSA as their largest investor.
In light of this, the merged entity will also benefit from economies of scale by a large capital base, technology and wide delivery channel that have become critical in operate sustainably in view of the low capacity utilisation in the various sectors of the economy.
Meanwhile NicozDiamond reported total comprehensive income jumped over 5 000 percent to $2, 9 million during the year to December 2017 compared to $52 507 reported in the prior year on strong performance in United General Insurance (UGI) in Malawi.
“This was largely buoyed by the good performance from the company which posted a profit after tax of $2, 4 million, a significant improvement in performance from the $1, 7 million of 2016,” said Karidza.
Gross premium written increased by 9 percent as both company and UGI Malawi recorded modest revenue growth during the year.
Operating expenses increased 13 percent fuelled by the rising inflation especially in Zimbabwe while Malawi incurred restructuring costs which are expected to result in cost efficiencies in the future.
Net investment grew 75 percent emanating from the firm as returns from quoted equities and fixed income securities improved significantly.
The group generated positive cash from operations of $2 375 852 in the year which was an improvement of 163 percent when compared to prior year on the back of improved premium collections by the company.
Total consolidated balance sheet (Net asset value) grew by 15 percent to $21, 6 million. The Company’s capital increased to $14, 7 million from $12, 4 million in 2016 and remained well above the minimum statutory capital requirement for short term insurance companies in Zimbabwe of $2, 5 million.
“The Malawi operation was however still below the minimum required solvency in the market, pointing to the need for recapitalisation,” said Karidza.
In the outlook, the group remains positive of its profitability despite increasing challenges in the operating environment.
NicozDiamond declared a dividend of 0, 096 cents a share.