Consolidation of Baobab Reinsurance leads to strong balance sheet
The consolidation of Baobab Reinsurance Group’s operation in Zimbabwe, Zambia, Malawi, Mozambique and Botswana into Emeritus Reinsurance International headquartered in Gaborone has led to the company having a robust balance sheet.
The development is to grow Emeritus unit in Botswana, under a risk- based capital model, directly linking the amount of business underwritten to the available capital to have potential to underwrite more business.
“Consolidating companies under Emeritus International has resulted in a robust balance sheet supported by substantial capital, enabling us to write a larger volume of business. This competitive capital position is advantageous in the reinsurance sector, where size plays a significant role,” said Emeritus Reinsurance Managing Director, Patience Marwiro.
She said the current balance sheet increases the business’ retention and rating, a crucial asset for a reinsurer.
Marwiro is optimistic that by strengthening the balance sheet, the development enhances business retention capabilities and improves rating as a reinsurer.
“These are essential assets for a reinsurer seeking to provide stability and security to its clients. This strengthened position allows us to generate increased returns for our shareholders while simultaneously adding value to the assets present in Botswana,” she added.
She further said another notable benefit of the riskbased capital model is the potential reduction in premium flight, which refers to premiums paid outside Botswana.
“By having a robust capital base and expertise in reinsurance, Emeritus can retain a larger portion of premiums within the local economy. This, in turn, stimulates the local economy through increased technical knowledge transfer, the development of insurance value chains, and the creation of employment opportunities.”
Marwiro said consolidation has had a significant impact on the business operations of Emeritus International, such as the ability to write a larger volume of business, reduce premium flight, stimulate the local economy, enhance market confidence and perception, and increase business retention. “By consolidating our balance sheet, we have created a solid foundation that supports our underwriting capacity. This expanded capacity enables us to cater to a broader range of clients and projects, positioning us as a preferred partner in the market. “The consolidation has also brought together shared expertise and technical know- how across African markets, allowing us to offer unparalleled reinsurance solutions,” said Marwiro.
She also highlighted that, the consolidation has had a positive impact on employment, resulting in a 40 percent increase in our workforce. “This demonstrates our dedication to supporting the local economy and providing valuable job opportunities in the current economic climate.”
Though Emeritus International is implementing a strategy to diversify its business operations and income across various African markets, Botswana market holds a special position, as the company establish a stable and resilient financial position.
“The aim is to create an income ecosystem where 51 percent of revenue originates from the region and 49 percent from Botswana. This will attract a favorable credit rating and establish multiple sources of income outside of Botswana. This will also result in foreign currency inflows into Botswana,” Marwiro said.
She said Emeritus International is pursuing a dual approach: growing its business in Botswana while actively seeking new premium streams from the region.
“Since the company’s amalgamation, this strategy has yielded positive results, particularly during the treaty renewal period. Emeritus Re has been able to maintain its existing treaties with local companies and, in some cases, increase its share of the business. This is a testament to the confidence that our clients have in our services.”
Meanwhile, Marwiro says despite new players entering the market, Emeritus has managed to retain its business relationships and continues its operations.