Pic : Group Chief Executive Officer of FMHL Mr Douglas Hoto. (Equity Axis) 

• Investment property reached US$150 million, with the land bank valued at US$31.5 million.
• Management linked First Mutual Properties’ delisting to property development and capital recycling.
• Fair-value gains drove much of HY2026 profit, sharpening the recurring-earnings test.

HARARE – First Mutual Holdings is moving to extract more cash and recurring returns from its property portfolio, placing a US$31.5 million land bank at the centre of a broader capital recycling programme after management linked the delisting of First Mutual Properties to plans to develop those assets.

The property portfolio reached US$150.0 million at June 2026, equivalent to about 49% of the group’s US$306.0 million asset base. Property values increased from US$139.7 million at December, supported by US$13.8 million in fair-value adjustments during the six months.

Management told analysts on Tuesday that unlocking the land bank was one of the factors behind the delisting of First Mutual Properties, which now sits within the group’s investments cluster. Group executives said the listed market had offered limited support for investment-property companies, particularly around capital raising, opening room to consider a wider set of structures and financing options for the property portfolio.

The land portfolio has already provided an early test of the carrying values sitting on the balance sheet. Management disclosed that a parcel previously valued at about US$3.05 million was sold for roughly US$4.5 million during the period, producing a realised uplift of about US$1.45 million and contributing to a broader review of land valuations.

First Mutual’s published accounts record US$4.5 million of investment-property disposals during the half year and US$13.8 million of fair-value adjustments. The portfolio closed at US$150.0 million, including US$146.0 million of completed property and US$4.0 million under development. The valuations were prepared by independent valuer Dawn Property Consultancy using assumptions that include rental income, maintenance costs, development costs and discount rates.

The land bank recorded the largest revaluation movement in management’s presentation, adding about US$5.7 million during the period. Its carrying value closed at approximately US$31.5 million. One disposal above carrying value provides transaction evidence for part of the portfolio; further disposals and developments will determine how much of the remaining valuation can be converted into realised returns.

That conversion carries greater weight after the composition of First Mutual’s half-year earnings moved heavily toward investment performance.

Profit after tax increased 222% to US$19.8 million from US$6.2 million. Net investment return rose 568% to US$13.7 million and fair-value gains on investment property increased to US$13.8 million from US$1.0 million. Insurance contract revenue grew 6% to US$92.8 million, with the insurance service result declining 7% to US$13.2 million.

Equities generated US$12.3 million, or about 90% of total investment return. That included US$3.85 million from unquoted equities and US$8.05 million from quoted equities, alongside US$722,000 in dividends and US$1.45 million in interest income.

Management acknowledged in the results that the magnitude of the investment and property gains was market-driven and may vary materially between reporting periods. That places more weight on the group’s ability to turn appreciated assets into income streams capable of supporting earnings across different market conditions.

Pressure inside parts of the insurance portfolio adds another layer to that assessment. First Mutual Health grew insurance contract revenue to US$39.7 million as its claims ratio increased alongside higher claims volumes. At the analyst briefing, management said operating profit declined as claims costs grew faster than revenue, with investment income providing a large contribution to the subsidiary’s overall profit.

NicozDiamond also entered the second half with limited underwriting headroom. Insurance contract revenue increased 11% to US$21.5 million and profit reached US$5.1 million. Management’s presentation put the combined ratio at 98%, with fair-value gains on investment property contributing materially to profit. The published results attribute NicozDiamond’s profit growth mainly to those property gains.

Cash generation offers another measure of the earnings mix. First Mutual generated US$4.4 million in net operating cash flow during the six months, compared with US$4.1 million in the corresponding period last year. The cash-flow reconciliation removes US$13.8 million in property fair-value gains and US$12.3 million in equity fair-value adjustments as non-cash items.

For an insurance group, cash flow and accounting profit capture different parts of the financial model. The size of the valuation component still matters for capital allocation because management is simultaneously funding digital investment, property development and expansion outside Zimbabwe.

First Mutual wants regional businesses to account for about 40% of insurance contract revenue over time, from roughly 18% to 20% currently, according to management at the briefing. The group has opened a Rwanda branch under its Botswana reinsurance operation and intends to develop that presence into a separately capitalised business. It is also pursuing a health insurance or medical-aid operation in Botswana.

Property recycling sits directly alongside that regional growth programme. Management said every property will be reviewed against internal investment parameters, opening the way for further sales where assets no longer meet return requirements and redeployment of the proceeds into other opportunities.

The US$31.5 million land bank now provides a measurable test of that strategy. Future disposals can be assessed against carrying values, developments against achieved yields and rental cash flows, and recycled capital against the earnings generated after redeployment. First Mutual Properties has already completed one disposal above carrying value; execution now rests on how much of the remaining land-bank value can be realised and converted into recurring returns.

- Equity Axis News