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Stock crash sinks Afre Corporation

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Afre Corporation Limited, Zimbabwe’s largest life and funeral assurer, lost $8 million to equity investments on the Zimbabwe Stock Exchange (ZSE) in the first half of the year, as the local bourse slumped to a record low.

The fair value of equity investments in quoted companies dropped to $8,7 million from $34,5 million in the comparable period last year.

Investments in unlisted equity investments also declined to $867 652 from $4,4 million the year before.

“We’ve got some investments in listed counters. The investments were affected by the fall in ZSE share prices in the first six months of the year,” Kennedy Lemani, Afre finance director, said.

“Unfortunately, investment is the nature of our business; we can’t run away from it.”

Afre holds a number of equity portfolio positions on the ZSE, including a 25,18% equity interest in Rainbow Tourism Group (RTG) – the country’s second largest hotels group, acquired in January last year at $9,86 million.

The ZSE went on a free-fall in March after government officially announced the compliance deadline of indigenisation and economic empowerment regulations gazetted three months earlier.

The news triggered panicky sell-offs, which eroded nearly 20% of the value of the market in the first half of the year.

Afre also reduced its exposure and its sell orders raised $2 million, which the group subsequently transferred to the money market, boosting the portfolio to a closing balance of $3 million.

The group’s investment mix is now skewed towards properties and money market investments.

In fair value terms, Afre’s property portfolio held through Pearl Properties has appreciated to $74,7 million from $70 million in the first half of last year.

For the half year to June 30, Afre reported an after-tax loss of $7,7 million or $0,61 basic loss per share from a profit position of $21,9 million or $2,31 basic earnings per share in the comparable period last year.

RTG contributed $28 168 Gross premium written (GPW) rose 192% to $26 473 from $9 079 in the previous period. Net Premium income also surged 216% to $20 517 from $6 484.

First Mutual Life, the group’s life, medical aid and employee benefit business, drove premium income, the bulk of which came from the subsidiary’s Medical Savings Fund launched last year.

The Fund contributed $8,2 million to the group’s total premium income, followed by Afre’s reinsurance business, which contributed $7,4 million, and employee benefit fund, which contributed $5,2 million.

The life operation accounted for the least income at $1,2 million.

“We haven’t yet broken through with our life business,” Lemani said. “The inflows are low, but increasing. But over time, as the economy improves, people will start having a long-term view on funeral and life assurance.”

The portfolio’s premium income has been affected by the country’s changeover to a multicurrency system, which reduced the quantum of risks.

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