THE Southern Africa Reinsurance Company (Sare) has reported significant year-on-year growth in earnings, turnover and offshore income in its half-year results to June 30.
Profit before tax has risen by 1 315% over the previous half-year, moving from $63 million to $896 million.
Investment income has risen 640%, from $83 million to $623 million and gross premium written has risen 304% from $556 million to $2,242 billion.
Managing director Chris Gomwe attributed the good results to Sare’s superior service, prompt payment plus the fact that there had been no big losses in the period under review.
He said results had also been boosted because claims against motor policies had been reduced.
“Since insurance is a fortuitous business it is difficult at this stage to guarantee that we will not have large claims during the balance of the financial year,” he said.
“It has been noteworthy, however, that there has been a significant reduction in motor claims so far and the overall loss ratio of incurred losses against the earned premium under this sector of insurance which makes up a major portion of our underwriting portfolio has reduced by 24% during the period under review compared with the same period last year.”
He attributed the reduction in accidents to the fuel shortage in that there are fewer cars on the road as people avoid unnecessary journeys and, where possible, travel with others to save petrol.
“We have contained our loss ratio to satisfactory levels and this is reflected in our results and, for the first time, we have posted an underwriting profit of $273 million,” Gomwe said.
He said while regional underwriting had not grown significantly due to the poor publicity that Zimbabwe is receiving, it had increased during the period under review.
Gomwe said he was considering a recapitalisation exercise to strengthen Sare’s balance sheet and consequent underwriting ability. “Inflation is eroding our capital base which makes us less attractive to external insurance companies,” he said.
Nevertheless, external underwriting represents 8% of Sare’s premium income at official exchange rates, which is an increase on the same period last year.
Gomwe said the company was working hard to develop this aspect of its business in order to increase the much-needed foreign currency income.
Claims against the reinsurers as a result of the fire at Elephant Hills Hotel have been paid and the claim has now been closed.
Sare said it did not believe the recent Zimbabwe Electricity Supply Authority fire and consequent destruction of equipment destined for the rural electrification programme would impact on it significantly. The assessors are still working on this claim.
Looking into the future, Gomwe said he was optimistic the trend set on Sare’s half-year results would continue on to the year-end results.
“We have managed to contain our retrocession costs this year and thro-ugh our properly arranged retro-programme we have managed to retain most of our written premiums,” he said.