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Tawanda Musarurwa Senior Business Reporter
Listed firm, Zimre Holdings, says income from its linchpin subsidiary – Zimre Property Holdings – were in line with initially set targets, but voids and debtors have increased as the coronavirus pandemic worsened in the later part of the quarter.

Zimbabwe has been in lockdown since March 30, 2020 as a measure to contain the spread of the Covid-19 virus, but this has affected economic activity and therefore most people’s incomes, which is beginning to be felt by companies.

Despite the emergence of the pandemic in Zimbabwe in February, Zimre’s property subsidiary managed to maintain a steady income during the first three months of the year.

“Rental income performance for  Zimre Property  Investments Limited (ZPI) was on budget on account  of the quarterly rental reviews being implemented and  reconfiguration of existing rental space for other uses in line with market demand and move towards turnover based leases,” said company secretary Lovemore Madzinga in a trading update.

“The company obtained a waiver to charge for some of its services in hard currencies. However, the reduced capacity  of  tenants  to  service lease contracts due  to  the mounting economic challenges, which became  more  pronounced  in  March 2020 with the outbreak  of the Covid-19  pandemic, resulted in increases in  void space and debtors.

Zimre Holdings said it remained profitable with  sufficient cash-flows on account of the continued and  calculated disposal of its stock of residential stands,  and the tight management of property operating and administrative costs.

But as a result of the hyper-inflationary conditions and the depreciating local currency, rental income declined in real terms translating into weakened property values in real terms. The group said its reinsurance operations’ capital positions met or exceeded the minimum statutory levels in the first quarter.

“Some regional operations are within the transitional periods set by regulators for compliance with new minimum capitalisation levels,” said Madzinga.

The group said its on course to provide competitive capital to regional operations mostly from its internal resources in order to increase capacity and take advantage of business growth opportunities in those markets.

“Key among those markets is Mozambique with  its growth prospects from the multi-billion US dollar natural gas projects, which were at the verge of being  commissioned. Credsure was set to meet the $37,5  million minimum capitalisation level for short-term insurers through organic growth.

Zimre’s reinsurance  operations started the year  on  a  positive note with increased treaty participation  especially from top tier cedants in the domestic market on account of a relatively strong balance sheet,  excellent service delivery and the increasing Emeritus brand equity.

The group expected both its domestic  and  regional entities  to contribute the bulk of its total  income in 2020, but due to the tight liquidity situation and other challenges, premium collections were subdued thus slowing down investment portfolio growth across the Group. In respect of its general insurance operations, Credit Insurance Zimbabwe Limited (Credsure) recorded above budget performance in most key result areas as well as significant growth compared to the  same period last year.

“The improvement is credited to its focus on offering  specialised  products to the market especially to  the tobacco sector and infrastructure development  projects  through underwriting  management agents,” said Madzinga.

“In historical cost terms profit for the period was 439 percent above budget on account of  the  significant  growth in topline  performance, favourable claims  experience (15 percent claims ratio) and controlled operating expenses. Due to the depreciating local  currency against the United States Dollars (USD), the  company is experiencing an increase in the demand  for cover in harder currencies. The industry is working  with IPEC to reintroduce USD-denominated policies  following their suspension in 2019 (IPEC Circular 13 of 2019).”

Notwithstanding the positive performance in the first quarter, the group expects uncertainty to writ large going forward.

“In the first quarter of 2020, the group was on course to achieve its performance targets for the year. However, the unexpected outbreak of the Covid-19 global pandemic in the last part of the quarter with its negative impact on business performance created a material uncertainty that would require extensive business re-strategising for survival,” said Zimre.