Home » General » Zimre Gets U.S $1,3 Million for Malawi Subsidiary

ZIMRE Holdings will receive about $1,3 million from NicozDiamond for the disposal of a 49 percent stake in its Malawi subsidiary United General Insurance Company as the group steps up efforts to raise about $7 million to shore up its liquidity situation. The group said last month it will sell off non-core assets to raise about $7 million to shore up its liquidity situation.

It is envisaged that a further $10 million will be raised through borrowings.

The disposal of General Insurance is part of the group’s strategy to strengthen existing reinsurance operations through recapitalisation, international rating and building critical skills. It follows the retrenchment of about 50 percent staff compliment of another subsidiary, Baobab Reinsurance, which it said is part of a review of cost structures.

The group said the disposal of the 49 percent in General Insurance Company will allow Zimre to realign its group assets in order to focus on the reinsurance business.

After the disposal, Zimre Holdings will retain a residual interest of 25 percent in UGIC.

“The directors of Zimre Holdings Limited and NicozDiamond Insurance Limited are pleased to announce to shareholders that following negotiations between the two companies, an agreement has been reached for Zimre Holdings to dispose 49 percent of its Malawi subsidiary, United General Insurance Company Limited, to NicozDiamond Limited, at a consideration of $1 274 962 effective January1 2015,” the two companies aised shareholders yesterday.

UGIC is one of Malawi’s leading short term insurers and has operated for over 40 years. Prior to the acquisition, NicozDiamond Insurance Limited had been managing UGIC on behalf of Zimre.

Zimre owns a 28,58 percent shareholding in NicozDiamond.

“The directors obtained an opinion from independent aisors that the terms of the transaction are fair and reasonable to both companies’ shareholders and that the transaction is in line with Zimbabwe Stock Exchange listing requirements,” the companies said. I

In the half year to June results the group said it was targeting to consolidate reinsurance as core business.

The company also plans to restructure investment portfolio through disposal of peripheral, non-core and non performing investments, in order to introduce liquidity in the core reinsurance operations.

The reinsurance division contributed $17,46 million in Gross Premium Written in the six months to June compared to $19,77 million in the same period last year and an operating loss of $1,54 million compared to an operating profit of $0,31 million achieved in 2013.

Source : The Herald