Shareholders OK ZIMRE $15m rights issue

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ZIMBABWE’s largest reinsurer ZIMRE Holdings (ZHL) shareholders on Wednesday approved the raising of US$15 million through a rights issue at an Extraordinary General Meeting (EGM).
The move is meant to strengthen the group’s capital base and subsequently increase its underwriting capacity.
ZHL has interests in the insurance, reinsurance, life and pensions, property and agro-industrial sectors.
The approval, which will be underwritten by NMB, means a total of 750 million new ordinary shares will be offered for cash at a subscription price of US$0,02 each to existing shareholders on a basis of one new ordinary share for every 1,041 ordinary shares already held by existing shareholders registered as at January 30, 2015.
The reinsurer intends to sell off non-core assets to raise about US$7 million.
In this regard Zimre Holdings has already sold its 49 percent stake in Malawi subsidiary, United General Insurance Company (UGIC), to its associate Nicoz Diamond for nearly US$1, 3 million.
In the half year to June the reinsurance division contributed US$17, 46 million in GPW compared to US$19, 77 million in the same period last year and an operating loss of US$1, 54 million compared to an operating profit of US$0, 31 million achieved in 2013.
ZHL recorded a loss after tax of US$0, 11 million in the six months to June compared to a profit of US$2, 39 million in the same period the previous year. 
The new ordinary shares will have equal ranking to all existing shares with effect from the date of issue. 
The rights issue is expected to enhance liquidity.
Zimre holding is also seeking to use the money from the rights issue to reposition its subsidiaries, both local and regional, to be competitive in their respective markets.
The capital raising initiative is part of a three pronged initiative being employed by the reinsurer to turnaround its fortunes.
Apart from raising capital, Zimre is undertaking a cost optimisation and investment restructuring exercise.