HomeBusinessBaobab Reinsurance seeks $17 m

Baobab Reinsurance seeks $17 m


HARARE – Baobab Reinsurance, a wholly owned subsidiary of Zimre Holdings (ZHL), is seeking to raise $17 million through borrowing and selling off non-core assets after a high number of defaults left the firm struggling to honour claims.zimre

Group chief executive Albert Nduna told The Source in an exclusive interview on Friday that the firm’s asset portfolio was dominated by illiquid assets, leaving it heavily reliant on collected premiums for liquidity.

But the firm is experiencing a high level of defaults, which has resulted in delays in honouring claims.

“What is happening is a chain reaction,” Nduna said.

“The client is failing to pay the brokers, the brokers are failing to pay the insurers, the insurers are failing to pay the re-insurers and re-insurers are failing to pay the retrocession.

“There is delay in that whole chain. The delay comes right from the flow of premiums. The money that the institution owes out and the money the institution is owed is almost 50/50.”

Nduna said Baobab was not performing to ZHL liking, despite the group’s strong persuasion that the firm can do better.

“We are very optimistic; we are restricting our assets because we failed to raise fresh capital post 2009.

“Our problem has been compounded by the fact that we don’t have a banking sister to back us up,” he said.

As a result, Baobab is seeking to raise capital in a number of ways to liquidate its obligations and plans to retrench to reduce its wage bill among other cost containment measures.

“We are seeking to raise at least $10 million fresh capital to the business as well as to liquidate redundant assets to get at least
$7 million,” Nduna said.

“We have offered a retrenchment package to employees for 2015 and we currently working out a budget for that as we work towards resizing the organisation.”

Baobab is set to dispose a number of investments deemed not crucial to its core insurance operations. The company operates in Zimbabwe, Malawi, Zambia and Mozambique.

— The Source

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