Group chairman, Benjamin Khumalo, said this was the result of a favourable claims situation in the majority of the insurance operations and fair-value adjustment in long-term equity investments.
“The group’s cost cutting measures are now bearing fruit,” said Khumalo, adding that the improved performance was ascribed to increased uptake of insurance products in both the foreign and domestic markets.
ZHL is a holding company of financial services companies in general insurance, reinsurance and insurance broking.
In the period under review Gross Premium Written (GPW) was at US$28,4 million, representing a growth of 27% over the same period last year.
Khumalo said that foreign operations contributed 63% of the GPW while domestic operations contributed 37%.
ZHL has a significant presence in Zambia and Malawi through associate companies.
Khumalo said the market was experiencing liquidity challenges which were affecting interest and customer default rates.
“Liquidity constraints in the domestic market are expected to continue impacting negatively on the performance of the insurance sector,” he said.
The reinsurance sector which is the group’s core business achieved GPW of US$20,5 million from the US$14,8 million achieved in the same period last year.
The sector’s profit before tax during the period under review stood at US$2,4 million against US$0,4 million achieved in the same period 2010.
This increase in profitability was attributed to the favourable claims experience.
“The tight liquidity in the market resulted in low investment returns due to lack of surplus funds to invest and thus negatively impacted on sector profitability,” Khumalo said.
Meanwhile, ZHL is in the process of disposing its entire equity stake in Genesis Investment Bank to a consortium of local and foreign investors who are expected to inject capital into the bank.
The disposal is part of the on-going group strategic intent of disposing non-core and non-profitable operations in order to focus on and strengthen the core re-insurance operations.
Genesis is one of the three banks which are still to meet the minimum capital requirements prescribed by the central bank.
Other banks are Kingdom and the Zimbabwe Allied Banking Group.