- Insurance contract revenue skyrocketed 497% to $25.9 billion
- Insurance service result surged 446% to $3.8 billion
- Rental income expanded enormously by 584% to $1.4 billion
- Net investment returns totaled $7.9 billion
- Profit for the period skyrocketed 616% to $17.6 billion
Harare - In the face of persistent macroeconomic instability and hyperinflation in Zimbabwe, First Mutual Holdings Limited was able to navigate treacherous waters to deliver a robust set of results for the quarter ending March 31, 2023. First Mutual Holdings Limited attained higher business levels in its core insurance units and increased revenue in its investment property and micro-lending units. The migration from the local currency to USD transactions persisted across all local subsidiaries, especially in the general insurance and reinsurance businesses, due to the volatility of the ZWL.
Insurance contract revenue skyrocketed 497% to $25.9 billion due to sustained revaluation of policy values to match inflation and exchange rates, ensuring adequate coverage, and the migration of more policies to USD to restore value in the event of a claim. USD policies constituted 53% of insurance contract revenue at $14.7 million compared to 54% previously.
Insurance service result surged 446% to $3.8 billion due to increases in insurance contract revenue and improved retention as evidenced by growth in net reinsurance revenue.
Rental income expanded enormously by 584% to $1.4 billion due to a higher percentage of USD leases, inflation-adjusted ZWL rental rate increases, and an occupancy level of 84.55% compared to 89.99% previously. The average rental per square meter was $4.73 compared to $4.61 previously.
Net investment returns totaled $7.9 billion, a 159% increase driven by recoveries on the ZSE.
Profit for the period skyrocketed 616% to $17.6 billion due to surges in insurance contract revenue, rental income, net fair value gains in investment properties, and net investment returns buoyed by a rebound in listed equities.
First Mutual was astute in transitioning more of its business to US dollar terms, which allowed revenues and asset values to keep pace with soaring inflation and currency devaluation. By matching policy values and rentals to inflation, they are cushioned from collapsing results in the face of an adverse operating environment.
The group boasts a well-diversified business model across insurance, property investment and other sectors like microfinance. This mitigates overreliance on any single segment and provides multiple engines of growth. The results showcased strength across divisions, signalling the resilience of the diversified model.
First Mutual's superior brand and market positioning provide competitive advantages that are difficult to replicate. Clients continue to place their trust in the group due to its long track record of fair dealing and claim settlement in good times and bad. This affords considerable pricing power and policyholder retention.
The ability to generate profits and investment returns even during periods of pronounced weakness demonstrates First Mutual's competence in risk management, cost control and balance sheet composure. These are qualities demanded by the market and regulators.
In conclusion, while the group's performance was assisted by more business pivoting to US dollar terms, the results point to an exceptionally well-run operation with significant resilience and shock-absorbing strategies that enable consistent value creation for clients, even when the chips are down. First Mutual appears to have flexed its muscle as the domestic market leader.
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