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Tinashe Makichi Business Reporter
The country’s largest Reinsurance Group, Zimre Holdings Limited says it will this year grow the local and regional market following the shareholders approval of the $15 million rights offer to shore up its capitalisation levels.

At the company’s extraordinary general meeting held yesterday, shareholders approved the proposal to offer 750 million shares at a subscription price of $0,02 each payable in full on acceptance.

The company seeks to use the money from the rights issue to reposition its subsidiaries, both local and regional to be competitive in their respective markets. The capital raising initiative is part of a three pronged initiative being employed by the reinsurer to turnaround its fortunes. Speaking on the sidelines of the EGM, Zimre chief executive Mr Albert Nduna said there is hope for growth in the current year despite the hardships encountered by the company the previous years.

“We have been facing a lot of hassles in our operations especially in the Reinsurance business because without capital it has been difficult to operate against small capitalised entities in the country.

“2014 was a very difficult year and definitely we are expecting 2015 to be better. I think we are making great inroads both local and regional. Even our Agro-Industrial is coming up and structuring things which will change the face of that operation,” said Mr Nduna.

He said in the coming two months CFI would be a completely different entity in terms of operation.

“The size matters in reinsurance and insurance in general and not just the size but the quality of the assets. In 2009 over 50 percent of our assets were burnt leaving us with hard assets and equities. Therefore it is difficult to run a reinsurance business without sound capital levels,” said Mr Nduna.

“Those are the problems that the company has addressed with this capital raising initiative. The funds will be used to strengthen reinsurance operations both local and regional,” he said.

Apart from raising capital Zimre is undertaking a cost optimisation and investment restructuring exercise.

Zimre Holdings subsidiary, Baobab Reinsurance has already indicated that it is retrenching about 50 percent of its staff compliment.

The restructuring of its investment portfolio on the other hand is being achieved through the disposal of peripheral, non-core and non-performing investments, in order to introduce liquidity in the core reinsurance operations.

The reinsurer intends to sell off non-core assets to raise about $7 million. In this regard Zimre Holdings has already sold its 49 percent stake in Malawi subsidiary, United General Insurance Company , to its associate NicozDiamond for nearly $1,3 million.

Mr Nduna said the company in the future is expecting to explore other markets with the hope of getting into the top ten in Africa.

He said South Africa is one of the destinations that the company might look at in the future.

Mr Nduna said South Africa is a competitive market and that venture will help boost the company’s prospects of regaining its position as the biggest reinsurer in the country.

In the half year to June last year the company’s reinsurance division contributed $17,46 million in GPW in the six months to June compared to $19,77 million in the same period last year and an operating loss of $1,54 million compared to an operating profit of $0,31 million achieved in 2013.

ZHL recorded a loss after tax of $0,11 million in the six months to June compared to a profit of $2,39 million in the same period last year.

ZHL has interests in the insurance, reinsurance, life and pensions, property and agro-industrial sectors.

Apart from local operations, ZHL also has investments in Mozambique, Malawi, Zambia, South Africa, Uganda and Botswana.