Information on the target
Zimre Holdings Limited, an integrated financial services group, has made a strategic investment of $2 million into Credit Insurance Zimbabwe (Credsure) by acquiring a majority stake in the insurance firm. This move has increased Zimre's shareholding in Credsure to 80 percent, following a successful rights issue aimed at recapitalizing the struggling business. Credsure, established in 1965, initially focused solely on credit insurance services but diversified into general insurance in 2007, positioning itself as a specialist provider of construction bonds and guarantees.
The company was created to facilitate export finance by allowing the cession of credit insurance policies to financial institutions and suppliers. Zimre's group chief executive officer, Stan Kudenga, indicated that the performance in 2017 showed signs of a turnaround, with a notable reduction in losses. The company is set to undergo a restructuring exercise to enhance operational efficiency and expand its market share through an underwriting management agencies structure.
Industry overview in the target’s specific country
The insurance industry in Zimbabwe has faced significant challenges over the past decade, including economic instability and regulatory changes. However, recent trends indicate a gradual recovery, driven by improved market confidence and a focus on enhancing underwriting standards. The sector has seen a resurgence in demand for both credit and general insurance products, particularly as businesses seek to mitigate risks associated with economic fluctuations.
In 2017, the total income for Zimre Holdings increased by 17.6 percent, reflecting a broader recovery within the industry. This growth was attributed to improved revenue from property sales and a steady recovery in core reinsurance operations. The ongoing restructuring efforts within the industry have also contributed to a more favorable operating environment, allowing companies to better align their costs with revenue.
Moreover, the decline in claims experienced in regional markets, which fell by 31 percent from $4.8 million in 2016 to $3.3 million in 2017, has further bolstered the industry's outlook. The focus on operational efficiency and prudent underwriting strategies has positioned companies like Zimre and Credsure to capitalize on emerging opportunities in the market.
The rationale behind the deal The acquisition of a majority stake in Credsure by Zimre Holdings is a strategic move aimed at revitalizing the insurance firm and enhancing its operational capabilities. By injecting capital and increasing its shareholding, Zimre is po…