HARARE- Fidelity Life Assurance, a ZSE listed insurance company focused on the Life business, is set to raise additional capital through a rights offer, as it solidifies its business refocusing strategy.

In a cautionary statement published on the ZSE website, the company advised the investing public to take caution when dealing with its shares, further highlighting that it is engaged over a possible transaction which would have a material impact on the company’s share price.

The said transaction which is a rights offer involves the offer of additional shares to existing shareholders on a pro rata basis.

For example, the company may offer 1 additional share for every 5 shares readily held by existing shareholders. The offered shares would typically be priced a relatively favourable price to the market share price of the same stock.

Over the past few years Fidelity has realised an overweight on the property side, whose income emerged to eclipse that from core insurance business. The major challenge was that as income from property sales grew, that from insurance dwindled.

Other players offering Life insurance began to eat into Fidelity’s space, as the company lost edge and focus, while resources were chasing the property buck.

In 2017 the group undertook a major restructuring exercise which into 2019, is still ongoing. The restructuring exercise focuses on returning the business to its core mandate of insurance.

In 2018 financial year, the group achieved a growth of 44% in gross premium income ahead of the prior year. This was mainly driven by annuity consideration, recurring and new premiums under employee benefits and Life premiums. Consequent to the growth, the insurance business reclaimed its spot as the top revenue driver.

The performance was also helped by a slowdown in property sales in line with the South View Park development which is nearing its tail end after years of driving turnover through stand sales.

Fidelity sits on a massive land bank known as Glenara Estates, which was acquired from CFI a couple of years ago. This land bank could unlock further potential on the property side of the business. The land is however subject to litigation after the present management at CFI contested the sale as irregular.

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