Business reporter
A decline in investment performance and contribution from associates weighed down NicozDiamond’s performance for the year ended December 31 resulting in a 52 percent drop in profit to $1,1 million against $2,3 million for the prior year. According to the chairperson of the insurer Mr Albert Nduna associate companies contributed negatively and took away 28 percent of the group’s profit.
“Diamond Sequros, the new operation in Mozambique was accounted for as an associate for the first time in the year and recorded a loss as expected.
“Though the performance of other associates, Fidelity Funeral Services, and Clover Leaf Panel Beaters were improved, they also had to be impaired in the year to align their Net Asset Values in line with accounting standards,” he said.
Despite the fall in profitability the insurer’s operating profit jumped 17 percent on the back of growth in insurance underwriting of 45 percent to $1,3 million during the period under review from $892 000 the prior year
The domestic insurance business was the toast of the group contributing 88 percent to profit before share of associates, followed by the property companies which contributed 11 percent and the Uganda operations with 1 percent.
A strong focus on management of cash flow and expenditure resulted in a 43 percent increase in positive cash from operations to $2 million.
The group’s balance sheet was up 4 percent while capitalisation at $10,8 million was way ahead of the minimum capital requirements for insurers of $1,5 million, while its Ugandan operations were also compliant with those in that country.
Turning to the operations Mr Nduna said the operating environment in Zimbabwe remained challenging during the period under review owing to continued liquidity constrains and low capacity utilisation resulting in subdued economic performance for the year.
“The short-term insurance sector in Zimbabwe recorded minimal growth in the year as this sector generally follows the fortunes of the economy.
“The strong and secure industry players benefited from the increase in security consciousness of the insuring public who moved their business to more secure companies.
“Various measures were also introduced by the insurance regulator in the year, a welcome move as the implementation of these measures will strengthen and improve market confidence in the sector,” he said.
On the regional front he said the insurer maintained its equity investments in First Insurance Company of Uganda and diamond General Insurance of Zambia after following its recapitalisation rights in both companies.
“The management and technical services contract with United General Insurance of Malawi also remained in place during the period and the entity recorded improved profitability,” he said.
Despite the loss recorded by Diamond Seguros Mozambique, Mr Nduna said the company managed to meet the revenue targets for the nine months of trading.
“This was in line with expectations for the first year of trading,” he said.
Looking ahead Mr Nduna said the insurer plans to increase its profitability through products and distribution channel innovations and by also exploiting information technology.
“Prudent underwriting and expenses management will also continue to be focus areas. The proceeds from the sale of Diamond Villas will be used to improve liquidity and unlock investment income, a process that has started in earnest in 2015,” he said.