N. Mureriwa CBZ Insurance Managing Director

N. Mureriwa

Managing Director

Introduction

I am delighted to report yet another good performance from CBZ Group Insurance Operations for the year ended 31 December 2016. The Life and Non-Life Insurance subsidiaries continued to contribute positively to the financial fortunes of the Group by remaining profitable during the year under review.

Operating Environment and Market Analysis

Economic performance remained low, characterised by weak domestic demand, tight liquidity and declining disposable incomes. The subdued performance of Government revenue against the background of high recurrent expenditures continued to constrain the fiscal space. Despite the foregoing, Government anticipated that the expansion of the tourism, construction and financial service sectors would drive the Gross Domestic Product upwards in 2016 by a projected 1.6%.

The Short Term Insurance industry’s Gross Written Premium increased by 1.2% from $213.44 million in 2015 to $215.97 million in 2016. On the other hand, the Life Insurance industry’s Gross Written Premium increased by 4% in 2016 to close the year at US$346.6 million. CBZ Insurance (Private) Limited accounted for 4.7% of the Short Term Insurance industry’s Gross Written Premium whilst CBZ Life (Private) Limited controlled 3% of the Life Insurance industry’s Gross Written Premium.

Business Operations

The Insurance Operations business segment continued to exploit the available synergies within the wider CBZ Group as a source of income, operational and cost efficiencies. The continuous diversification and rejuvination of product lines helped cushion the impact of the operating environment by remaining attractive and affordable to clients.

Financial Performance Highlights

CBZ Insurance (Private) Limited

Performance indicator 2016 2015 Change
Gross Written Premium Income $10.220 million $9.590 million Up
Net Claims incurred $2.414 million $1.877 million Up
Profit After Tax $0.914 million $1.149 million Down

The Company reported profit after tax of $914 941 for the year ended 31 December 2016. The profit attained was underpinned by increase in Gross Premium Income which grew by 7% during the year under review. Premium retention increased by 3 percentage points to 54% during the period although claims grew by 29% from the prior year. The Private Limited Company remained well capitalised with equity closing the period at US$5.1 million.

CBZ Life Private Limited

Performance indicator 2016 2015 Change
Gross Written Premium Income $9.56 million $13.21 million Down
Net Claims incurred $3.22 million $2.83 million Up
Profit After Tax $2.60 million $4.49 million Down

The reduction in Gross Premium income negatively affected the unit’s profitability as profit after tax for the year amounted to $2.6 million, a 42% decline from prior year. Risk management and cost containment were pivotal in mitigating the effects of the environment. The Company’s equity closed the period at US$19.3 million.

Strategic Thrust of Insurance Operations

The business continued to expand, especially in the informal sectors of the economy. In this regard and in anticipation of future business growth the Company made significant progress in expanding its delivery channels to tap into identified geographical, demographical and economic spheres. The strategies undertaken in 2016 positioned the bussiness for continued growth in both market share and profitability.

Overall, the Company has become stronger, more efficient and sustainable, with increased business underwriting capacity.

Insurance broking

The year saw the birth of CBZ Risk Advisory Services, an insurance broker. The unit is an independent broking firm, wholly owned by CBZ Holdings Limited. As at 31 December 2016, the unit was awaiting the Insurance and Pensions Commission (IPEC) approval which was subsequently granted post the reporting date.

Information technology

We continuously seek relevant technology that improves productivity and efficiency in line with our strategy to improve overall customer experience. Enhancements and reviews to appropriateness of current systems were undertaken during the year to ensure that the Company remains technologically sound.

Credit rating

Both the Life and the Non-Life units were rated by the Global Credit Rating Company (GCR) in the year under review and the following ratings were awarded:-

  • CBZ Insurance Private Limited
    Upgraded the national scale claims paying ability rating assigned to BBB+ (ZW) from BBB (ZW), with the outlook accorded as Stable. The rating indicates a continuous improvement in the company’s claims paying ability.
  • CBZ Life Private Limited
    Awarded the rating of Financial Strength Rating of BBB+, with a stable outlook indicating that the entity has strong financial security characteristics.

Customer focus

The Insurance operations values its policyholders as they are essential to the success of the business. The 24 hour Contact Centre launched in 2015 has enhanced customer convenience.

Outlook

We continue to look for ways to simplify the organization so as to enhance the speed of executing our service to our valued customers. Product development and quality of service will continue to be key drivers of our performance for the operations. Strengthening of the selective underwriting business philosophy will also guide our risk management principles in doing business.

Appreciation

My appreciation goes to our valued clients for their continued support and for partnering with us in our joint successes.

I would also like to thank the Boards of the Companies for their hard work, provision of direction and support to Management towards achieving our strategic goals.

To all our staff members, thank you for the hard work and commitment to the common objectives as evidenced by the good results. Let us remain focused and committed to our performance aspiration.

N. Mureriwa
Managing Director
23 February 2017

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