Source: Old Mutual anticipates upsurge in claims | The Herald April 8, 2019
Michael Tome Business Reporter
Financial services group, Old Mutual Zimbabwe anticipates an escalation in insurance claims emanating from Cyclone Idai that recently battered the South Eastern parts of the country.
The devastating incident affected varied economic sectors in Manicaland, forcing big corporates and small to medium enterprises to close shop or downscale operations.
Undoubtedly the agriculture sector was heavily disturbed considering that the area falls under the country’s agro-ecological region one housing top agro companies like Border Timbers, Wattle Company, Allied Timbers, Ariston, Tanganda, Matanuska, and Manica Boards and Doors.
Responding to a question and answer session at the analyst briefing last Friday, Old Mutual chief executive for the rest of Africa Jonas Mushosho, indicated that such extreme weather patterns like Cyclone Idai impact insurance business intensely.
A hydro power station disturbance had been reported by that time.
“We have not been able to make an assessment but I think there will be a huge impact. We do have quite a number of customers in agriculture in the eastern parts we are trying to assess the impact.
“We have a hydro power station, Kupinga, that has been reported on. Thankfully it survived but there are minor repairs on the pipes that take water from the weir to the power station.”
He stressed on the need to formulate a robust insurance framework that incorporates agriculture if the country was to realise a thriving farming sector since insurance ensures continuity as the framer is given basis to restart from the negative effects of natural disasters, Cyclone Idai or El Nino in the case of the 2018-2019 farming season.
“I think the occurrence of these extreme weather patterns emphasise that if we are going to support agriculture in this country we need to make sure that there is better risk management as our product is one of our solutions to that.”
In other developments the financial services group says it is satisfied with the rate of space uptake at the newly constructed Eastgate mall which was opened early this year as the occupancy level now stands at 57 percent.
These developments come on the back of the firm’s 41 percent growth in revenue to $1,4 billion for the year to December 31, 2018, becoming the second company to hit the billion revenue mark since dollarisation after Innscor.
Old Mutual attributed the revenue growth to an increase across all main revenue lines.
As a result, pre-tax profit for the year under review jumped 36 percent to $329,8 million compared to $242,9 million reported in the previous year.
Operating profit rose 23 percent to $79,2 million on the back of profit growth in the life, banking and asset management business.
Gross premium written was 10 percent firmer to $214 million for life and short- term insurance business on improved client retention and new business that was underwritten.
Operating profit for the life business grew 31 percent on growth in the retail segment and in asset-based fees.
The short term insurance, however, recorded an underwriting loss of $0,3 million due to a 47 percent growth in claims from prior year.
Private motor claims as repair costs increased due to foreign currency shortages contributed to the increase in claims.
The banking business reported a 17 percent growth in profit to $49,2 million from prior year’s $42,1 million on the back of growth in net interest income that was 19 percent above prior year.