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Business Reporter

FIRST Mutual Holdings (FMHL) now controls 71,4 percent of Diamond Seguros Mozambique, from 51,4 percent previously, after the company injected additional capital to increase its stake, as the group seeks to consolidate the short term business in the region.

FMHL, through its subsidiary NicozDiamond Insurance Company Limited, acquired 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.

After acquiring 100 percent interest in NicozDiamond in 2017, FMHL set its sights on increasing its stake in the Mozambican short-term insurance company, as it forged ahead to position itself as a major regional player in the insurance sector.

“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,” said Douglas Hoto, the group’s chief executive in the 2021 financials.

Diamond Seguros migrated from an associate to a subsidiary with effect from December 2020.

In 2021, gross premium written (GPW) grew by 75 percent 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 MZN193 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.

FMHL moved to become one of the largest short term insurers in Zimbabwe in terms of market base through the merger of its non-life units Nicozdiamond and Tristar Insurance.

Both companies now fall under the FMHL stable after the acquisition of a 100 percent stake of Nicozdiamond in a transaction that concluded in August 2020.

Following the acquisition and the subsequent scheme of arrangement, Nicozdiamond has since de-listed from Zimbabwe Stock Exchange (ZSE).

FMHL raised $17,25 million through a rights issue to finance the acquisition as well to expunge legacy debts and capitalise the new combined Nicoz Diamond and Tristar entities.

Mr Hoto said while there were uncertainties, the group’s solid financial position, coupled with a diversified business model, were expected to deliver sustainable growth.

He said the group remained confident in the country’s medium-term economic prospects and will thus continue to invest in core businesses and complementary areas.

“During 2021, this approach included the recapitalisation of our insurance subsidiary in Mozambique, Diamond Seguros, to meet regulatory capital requirements and capacitating the unit to underwrite health insurance business,” he said.

He noted that at the close of the year, the group finalised the capital raise for the reinsurance cluster with 61 million pula raised through a Botswana based financial partner, Aleyo Growth Fund 1 GP (Proprietary) Limited.

Mr Hoto said these two projects and other initiatives created a platform for further growth in the future.