- Total revenue declined to ZWL326.1 million
- Revenue from core operations increased by 55%
- Changes in insurance liabilities triggered higher expenses
HARARE – Fidelity Life Assurance of Zimbabwe, a diversified insurance firm listed on the Zimbabwe Stock Exchange (ZSE), providing products and services for life assurance, employee benefits, asset management, medical insurance, funeral assurance provision of actuarial services and residential property development, on Thursday issued a trading update for the 2021 first quarter ended March 31, 2021.
The Group’s first-quarter 2021 inflation-adjusted total revenue was ZWL326.1 million, 16% lower than the ZWL387.5 million reported in the first quarter of 2020.
FLA Company Secretary Chipo Matongo remarked, “the decrease in total revenue resulted from a 66% decrease in investment income, itself mainly driven by investment property fair value gains.
“Property fair value gains are computed in relation to movement in exchange rate, which grew by less than inflation rate,” she said.
She added that the Malawi subsidiary, which generates foreign currency revenue by its foreign nature, which is a hedge against high Zimbabwe inflation, performed well during the period under review.
However, revenue from the Group’s core operations increased by 55% in real terms from ZWL$163.8 million in 2020 comparable period to ZWL$253.2 million in the period under review anchored by the life assurance subsidiaries which contributed 87% to the Group’s total core revenue.
Matongo highlighted that the life assurance subsidiaries registered strong growth above inflation while also taking note of the increase in pension contributions.
“Locally, this was achieved through well-considered upward reviews of both premiums and policy values to protect value for policyholders,” she said.
“The growth was also supported by a general increase in pension contributions arising from modest salary reviews by companies.”
Meanwhile, inflation-adjusted total expenses grew by 12% from ZWL$167.8 to ZWL$187.1 in the current period, mainly driven by the changes in insurance liabilities that constitute 47% of the total expenses the current year compared to 45% in the same period the prior year.
The Group posted a profit before tax of ZWL$139.0 million for the period under review, representing a decrease of 37% compared to ZWL$219.7 million posted in the same period the prior year.
On the outlook, Matongo said the Group’s strategic focus remains on value preservation for key stakeholders which include policyholders, clients, shareholders, and employees.
“We will continue to ensure that all business units are profitable, cash generating and operating efficiently,” she said.
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