Golden Sibanda Senior Business Reporter
NICOZDIAMOND will decide on the fate of its Ugandan unit, First Insurance Company, as the short-term insurer is unhappy about the operation following a dismal performance over the past few years.
Group managing director Grace Muradzikwa would not say what decision NicozDiamond will take, but unequivocally indicated that the situation at FICO was worrying and that something will be done about it.
Mrs Muradzikwa said considering that the Ugandan insurer eventually slumped to an underwriting loss of $833 000, FICO was a big let down for the group.
NicozDiamond, whose underwriting profit was largely eroded by poor out-turn at FICO, saw gross premium written jumping 38 percent to $39,6 million, driven by new acquisition, United General Insurance of Malawi.
Net premium written was 51 percent higher to $26,5 million while after tax profit rose moderately, at 15 percent to $1 million, but the group is seriously worried by the 79 percent growth in net claims incurred at $14 million. Profit was propped up by deferred tax credit.
“(In terms of) underwriting profit, there is no doubt that FICO was a big let-down for us. But you would notice that expenses at $837 000, include provisions for that asset of about half a million dollars,” she said.
The Ugandan unit also contributed the largest chunk of the carrying amounts of unlisted investments that the short-term insurer had to impair given the loss in value of currencies in emerging markets it is invested in.
NicozDiamond had to adjust down significantly the value of the group’s carrying amounts relating to unlisted investments, with FICO being the source of an amount of over $600 000 that the insurance group had to impair.
Another $148 000 was impaired on the group’s Zambia operation, Diamond General Insurance, which saw depreciation of the kwacha from six to one dollar at the beginning of 2015, but continued on a free fall against the greenback to 12 to one by close of year.
Mrs Muradzikwa said it would not be fair to continue to hold the investments at the previous values given what happened to currency values.
However, the biggest headache has been FICO, which the insurance group said is not adding value and is now close to being fully impaired.
“We certainly not happy with the performance of FICO, there is no point in us being happy, in fact no one can be happy about that kind of performance, that is why I said we are going to do something about it,” she said.