A complicated shareholding structure in Zimre Holdings Limited's regional subsidiaries is stalling the group's move to consolidate all of its operations in new offshore company, Emeritus International Reinsurance Company. ZHL is in the process of a monolithic rebranding of its reinsurance operations under the Emeritus Reinsurance banner, and has to date concluded the transfer of some of its reinsurance subsidiaries to the new entity.
However the transfer of group's reinsurance operations in Malawi and Mozambique is yet to be concluded due to a convoluted shareholding structure.
ZHL chief executive Stan Kudenga, however, said they hope to have conclude transactions for the two operations in the next few days.
"We have already concluded the transfer of Zambia, Botswana and a few other subsidiary operations with the exception of Malawi and Mozambique. It has taken a bit of time mainly because of the current shareholding structure. You will find that our shareholding in Mozambique is indirect through Malawi.
"So our transaction is to transfer both Malawi and Mozambique, but that comes with its own implications in terms of capital gains in Malawi, which we are currently addressing. Hopefully that can be done before the end of this month," he said.
Emeritus International Reinsurance Company is based in the Botswana offshore International Financial Services Centre (IFSC) zone, and the group intends it to be listed on the Botswana Stock Exchange (BSE).
"The offshore company, which will be listed on the BSE in the medium to long term, is to be used by the group to raise capital required to strengthen the existing reinsurance operations and for regional business expansion," said the CEO.
Meanwhile, the group said its regional operations were operating on "low capital bases".
With respect to this, the group said it was stepping efforts provide the insurance operating units with "competitive capital" to enhance capacity and credit rating, including a move to relocate left over capital from a discontinued South African operation.
"The residual capital from the South African operation that was discontinued is being transferred to Botswana.
"We actually have a meeting with the central bank of South Africa hopefully to conclude this matter and transfer the capital into Botswana tomorrow," said Mr Kudenga.
For the year to December 31, 2017, ZHL posted a profit of $5,8 million, a 500 percent increase from a loss of $1,5 million suffered in the prior comparable period. The increased profitability came on the back of a positive performance by its local reinsurance and property subsidiaries. And for the first five months of this year, the group's gross premium income written came in at $14,4 million, up 9 percent from the same period last year.
Total revenue for the period stood at $13, 5 million, down 5 percent compared to the first five months of 2017.