Property sales boost Fidelity Life earnings

ZIMBABWE Stock Exchange-listed Fidelity Life Assurance (Fidelity Life) has reported an improvement in group earnings, driven by gross premiums written (GPW) and property sales, but expressed concerns with a tiered pricing system, which has undermined the performance of its property subsidiary.


In an abridged financial report on the half-year period to June 30, 2018, the life assurer with interests in property said profit after tax climbed to $2,2 million from $1,9 million in the comparable period the previous year.

Profit before tax soared 54% to $3,7 million from $2,4 million the year before.

The non-insurance business posted a profit before tax of $1,3 million representing a 52% increase on the prior year.

Fidelity life has footprints in the property development sector through the South View housing project and the Langford Estates.

“There has been no meaningful improvement in foreign currency supply allocations by banks during the half year,” the company’s chairman Fungai Ruwende said in the abridged report.

“Money market interest rates have also remained depressed, particularly for short-to-medium-term deposits. Tiered pricing has also taken root in the property market which has resulted in distortions in the fair valuation of properties. The group remains optimistic on improved economic prospects.”

In spite of the headwinds, Fidelity Life’s gross revenue nearly doubled to $25,8 million from $13,1 million in the same period last year, driven by strong growth in premium revenue and residential stand sales.

Stand sales grossed $12 million compared to nil sales in the first half of 2017 as the sales only occurred in the second half of the year.

Total assets grew to $127 million, up from $120 million recorded as at December 31 2017.

Ruwende said GPW increased 43% compared to prior year, driven by policy renewals and focused sales and distribution in the employee benefits segment.

Gross claims were down 11% from $2,8 million to $2,5 million.

Fidelity Life’s Malawi insurance business, Vanguard Life Assurance, reported a 40% premium income growth of 40% to close the period at $2,3 million against $2,7 million recorded in the comparative period.

“At 83% of total revenue, the two lines continue to be the residential stands sales and micro-lending receivables grew by 23% and 18 % respectively. These positive trends in revenue were however countered by poor performance on investments as fair-value losses of $1,2 million were recorded on the equity portfolio held by the group, compared to gains of $1,65 million recorded during the same period in 2017,” Ruwende said.

Operating expenses increased 56% largely due to the group’s restructuring activities designed to achieve optimal operational efficiencies.

Finance costs expensed by the group increased by 64% during the half year compared to the same period last year.

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