• PAT soared by 520% from a loss in 2020
  • Revenue almost doubled to ZWL 3.3 billion
  • Investment income increased by 99%

Harare- Zimbabwe Stock Exchange (ZSE)- listed diversified services group, Fidelity Life Assurance of Zimbabwe has posted a massive profit rebound of 520% to ZWL 274.9 million during the full year ended 31 December 2021 from a loss of ZWL 65 million recorded during the prior year which was heavily affected by COVID-19 disruptions. 

The growth from a loss position to a profit was necessitated by the total income for the group which almost doubled after soaring by 90% to ZWL 3.3 billion from ZWL 1.7 billion recorded during the prior year.

Revenue was driven by investment income and net premium written which increased by 99% and 75% from ZWL 866 million to ZWL 1 722.3 billion and net premium written increased from ZWL 611.8 million to ZWL 1 070.1 billion respectively. 

 “The growth in net premium written was driven by aggressive premium reviews and strong organic growth of the life book as well as significant inflows from new products launched which were supported by market diversification and enhancement of the distribution channels,” the Group’s chairperson Livingstone Gwata said in a statement accompanying the full year financials. 

“Investment income was mainly driven by fair value gains on investment properties and equities while the subsidiary in Malawi continued to provide a good hedge to the Group against the unstable currency movements and the adverse impact of the rate of inflation in Zimbabwe.”

During the reporting period, the Group said its subsidiaries in Malawi continued to hedge overall performance against the currency crisis in Zimbabwe which is looming up incessant inflationary pressures. 

From 18 January  2021 to 31 December 2021, the local currency plummeted by over 100% as the battle for the Zimbabwe dollar continued heading southwards.

During the period, the Treasury and the Reserve Bank of Zimbabwe (RBZ) continued with their hide-and-seek games, blaming individuals and companies for poisoning the nation’s economy which is governed by its policies. 

The reporting period also marked the worst ever witch hunt on individuals and companies which the government thought were responsible for putting the economy in the chamber. It saw more than 28 companies and individuals sued and fined for undermining the Statutory Instrument 127 of 2021 which commanded companies to price goods using the overvalued RBZ-governed auction market rate. The problem was that raw materials tracked the parallel market rate causing companies to lose millions of dollars. 

According to the Group, the currency crisis in the country remains the biggest challenge the Group will face in the 2022 new fiscal year as it will continue to drive up inflationary pressures. 

“The resurgence of high inflation is, in our view, the biggest threat to the economy in 2022 and the challenge on management is to ensure that revenue grows faster than costs,” Gwata added. 

In 2022 alone, the under-fired Zimbabwe dollar depreciated by a milestone 80% on the RBZ-governed auction market rate, which is however overvalued while on the parallel market, deficits have widened to over 200%.

Although month-on-month inflation decelerated for the second consecutive month in August 2022, there is no clear picture as far as the resuscitation of local currency is concerned. The takeover of behavioural economics and confidence crisis in monetary gaffers is even superseding the gold coins’ capacity to quickly restore the Zimbabwe dollar.

In the last week alone, the local currency lost with 5% which was a record loss in August 2022.

Because of currency weakness, operating and administrative expenses soared by 75% to ZWL 726 million from ZWL 414 million in 2020. Inflation affects the cost for insurance companies to pay off a claim, where both materials and labour become more expensive. 

“High inflation places on us the responsibility to ensure that we preserve value for our policyholders and all stakeholders and to that end, investment portfolio diversification is a priority in the current financial year.”

The government on the 25th of July 2022 introduced gold coins as a hedge against the depreciating Zimbabwe dollar. These are expected to stabilise exchange rates, manage inflation and restore currency stability. 

Business operations review

During the period under review, the Group launched a fully-fledged contact centre. On the other hand, Gwata said the year witnessed the creation and launch of an online Micro lending on-boarding platform with Life and Pensions business launching new products such as Vaka Yako and Covid-19 cover under the Employee Benefits business. 

On the customer service front, the Group opened a new service centre in Beitbridge for the Funeral Services business.

“We have seen enhanced customer communications through online and social media platforms for the Life and Pensions and Medical Health businesses, while the Bureaux De Change started disbursing the USD50 allowances to members of the public,” Gwata said.

 “We made significant progress in achieving our objectives anchored on the 3 pillars of Growth (Cash), Positioning (Customer) and Transformation (Change). The year also saw the Group reaching yet another major milestone as we saw the completion of the Southview offsite works.”

As the Group continues with the desire to preserve internal resources to strengthen the capital position of the Group through the deployment of earnings to increase business underwriting capacity, a dividend was not declared. 

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