Focus on value preservation and core business cushioned Fidelity’s performance

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  • Overall PAT for the Group stood at ZWL$74.1 million
  • Overall revenue for the Group increased by 52%
  • FLA, the Company contributed 38% to core revenue
  • Malawian subsidiary registered 78% revenue growth

Harare – Fidelity Life Assurance (the Group) recorded a positive performance in the year ended 31 December 2019 despite macroeconomic challenges.

In the financial results publication, the Group said profit after tax for 2019 stood at ZWL74.1 million on an inflation adjusted basis while inflation adjusted revenue increased by 52% from ZWL$332 million in the prior year to ZWL$503.6 million in 2019.

The Group said revenue was boosted by fair value gains on investment properties which increased from ZWL$3.1 million in 2018 to ZWL$371.8 million in 2019.

Fidelity Life Assurance of Zimbabwe (FLA, the Company) is the flagship of the Group and it contributed 38% (ZWL$57.9 million) to core revenue of the Group.

The Group said overall inflation adjusted total revenue for the Company increased by 26% to ZWL$335.9 million against ZWL$266 million recorded in the previous year.

“A key contributor to the revenue growth is share of profits from investments in subsidiaries amounting to ZWL$205.1 million. This resulted from a change in accounting policy of investments in subsidiaries from cost to equity method.” Said the company.

The Group also added that FLA recorded $87.1 million in fair value gains on its property portfolio contributing 26% to the Company’s total revenue and this is reflective of the self-adjusting nature of asset classes in response to rising inflation.

However, the Group said inflation adjusted total expenses increased from ZWL$259.5 million in 2018 to ZWL$313.8 million in 2019, a 21% growth driven by the increase in insurance and investment contract liabilities of 343% to ZWL$100.9 million from ZWL$22.8 million in the prior year.

Fidelity Life Assurance highlighted that FLA is expected to continue to anchor the Group in 2020 and into the future.

The Group’s Malawian subsidiary, Vanguard Life Assurance Company (VLA) recorded a 75% growth in revenue from ZWL$34.4 million recorded in 2018 to ZWL$57.8 million in 2019. VLA contributed 38% to core revenue of the Group.

The Group attributes VLA’s revenue growth to a 68% increase in premium income which increased to ZWL$57.8 million, up from ZWL$34.3 million in 2018.

The growth in premium income was a result of the devaluation of the ZWL$ against Malawian Kwacha due to the change in currency in Zimbabwe.

The Group said VLA remains a key strategic asset to the Group because its positioning is consistent with the Group’s thrust to de-risk Zimbabwe by bulking up on regional assets.

“Its country diversification value will come to the fore in 2020 as the Zimbabwe economy continues to deteriorate under hyperinflation effects.” Reads part of the statement.

In the Outlook, the Group said, “In the absence of market confidence that the country’s foreign currency inflows will improve, pressure on the local currency unit is expected to remain in the short to medium term. We thus expect the current harsh economic environment to persist in the short to medium. The persisting hyperinflation environment makes it imperative that we execute strategic initiatives that preserve value for policyholders and shareholders.”

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