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Nelson Gahadza Senior Business Reporter

Botswana based firm, Aleyo Capital, raised about US$5,02 million (BWP60 million) in Botswana on behalf of First Mutual Holdings Limited (FMHL), as the Zimbabwean insurer sought to recapitalise its regional reinsurance businesses.

The investment management firm bought a 29,1 percent stake in First Mutual Reinsurance Holdings Limited (FMRHL), which houses FMHL’s two re-insurance businesses in Botswana.

Mr Douglas Hoto, the group’s chief executive, said FMHL’s fund raising initiative was aimed at strengthening reinsurance operations through recapitalisation to enable underwriting of more business.

“At the close of 2021, we finalised the capital raise for the reinsurance cluster with BWP61 million raised through a Botswana based financial partner, Aleyo Growth Fund 1 GP (Proprietary) Limited,” he said in a statement accompanying the group’s 2021 financial results.

He said during the year under review, the group recapitalised its insurance subsidiary in Mozambique, the Diamond Seguros, to meet regulatory capital requirements and to capacitate the unit to underwrite health insurance business.

“These two projects and other initiatives created a platform for further growth in the future,” he said.

According to Mr Hoto, the completion of the foreign capital raise for the reinsurance units will lead to increased revenue and presence in the region and enhance opportunities for further strategic alliances.

The group acquired, through its subsidiary NicozDiamond Insurance Company Limited, a controlling stake in Diamond Seguros, a general insurance company incorporated and domiciled in Mozambique, on November 24, 2020 following the completion of a rights offer by that company. Diamond Seguros had been an associate of the Group prior to the attainment of control.

Mr Hotosaid during the year, Diamond Seguros migrated from an associate to a subsidiary with effect from December 1, 2020, however performance analysis is on full year’s financial statements.

He said gross premium written grew by 75 percent in 2021 as a result of improved broker business due to improved confidence after recapitalisation of the business in the third quarter of 2020.

“In Mozambican Metical (MZN), the GPW growth was 29 percent to MZN 193 million. The claims ratio at 32 percent was higher than the comparative period of 18 percent due to the stricter lockdowns in 2020,” said Mr Hoto.

He added that in August 2021, the group concluded a further capital injection of US$0,9 million through a rights offer to ensure that the company exceeded the revised minimum regulatory capital level, thus increasing its shareholding from 50,4 percent to 71,4 percent.

First Mutual Reinsurance Company’s GPW increased by 70 percent to $588,3 million principally due to improved business written in foreign currency.

Mr Hoto said the reintroduction by the authorities in July 2020 of the policy permitting the payment for goods and services in local and foreign currency led to an increase in USD dollar policies, which led to more business for reinsurers as there was limited US dollar underwriting capacity locally.

“The claims ratio further increased to 55 percent from 49 percent in 2020 as a result of the change in the business mix.”

FMRE Property and Casualty (Proprietary) Limited, Botswana saw its GPW grow by 4 percent to $2,1 billion in 2021.

Mr Hoto said the annual growth was 14 percent in Botswana Pula terms, at BWP179,1 million, arising from improved local and international treaty participation and growth of specialist lines of business under the casualty segment.

The claims ratio, at 39 percent, was marginally lower than the prior period level of 41 percent.

First Mutual Wealth Management saw its investment management fees grow by 21 percent to $83 million in inflation adjusted terms mainly due to the increase in funds under management underpinned by the growth on the ZSE All Index performance.