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Sanlam to up its stake in Zimnat

Companies
Harare - Financial services group Sanlam is set to announce further investment in Zimbabwe’s Masawara Insurance, increasing its stake in the company beyond the 40 percent it holds.

Masawara said the investment by Sanlam Emerging Markets, with an asset base worth $65 billion (R828 billion) in the Zimnat Group, would be made tomorrow.

Masawara chief executive Mustafa Sachak said the investment would have a “positive impact on clients and the insurance and reinsurance industries in Zimbabwe”.

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Santam and Sanlam offices, north of Johannesburg. File picture: Simphiwe Mbokazi

Sanlam this month said that the emerging markets division “grew its net result from financial services by 30 percent, comprising organic growth of 18 percent and a 12 percent contribution from structural growth” for the year to December 2016.

The Zimbabwean unit, alongside the Nigerian market, delivered strong growth results, according to the company.

Read also: Sanlam aims to grow its portfolio

Sources said the new investment would include developments at the Zimnat Lion insurance group.

Sanlam was not immediately available for comment.

Profits decline

According to Zimbabwe’s Insurance and Pensions Commission (IPEC), the non-life insurance industry’s consolidated profits for the quarter to March 2016, declined from $3.9 million to $2.3 million.

“The decrease in the profit after tax was mainly attributable to the decrease in business volumes, which translated into a deterioration in the industry average return on assets and return on equity,” IPEC said in its report.

Sanlam bought the Masawara stake in 2015 for $11.6 million in a deal that also included an asset-management business and a re-insurance business.

The company said at the time that the “long-term fundamentals for doing business in Zimbabwe are good notwithstanding the current economic pressures”.

Old Mutual Zimbabwe is the market leader, with about 14 percent of the short-term insurance market.

Zimnat has a market share of nearly 10 percent by assets.

Research by Fitch company BMI, said an “improvement in Zimbabwe’s economic environment” would potentially “stimulate strong growth in premiums across the insurance market” in the country.

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