Fidelity Life back in the black

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The Zimbabwe Stock Exchange (ZSE) opened the week strong, registering a 124% jump in turnover

ZIMBABWE Stock Exchange listed-Fidelity Life Assurance realised profit after tax of $74 million during the period ended December 2019 from a loss position of $3,8 million prior year due to a major growth in revenue.

BY FIDELITY MHLANGA

Total revenue grew by 52% to $503,6 million from $331,9 million during the period buoyed by fair value gains on investment properties.

The gains on investment properties grew significantly to $ 371,8 million from $3,1 million prior year.

“The group’s strategic choice to focus on inflation protection assets and core business resulted in positive results with the group recording a profit after tax of $74,1 million on an inflation adjusted basis during the year ended 31 December 2019,” said company chairman Fungai Ruwende in a statement accompanying the results.

Ruwende said the policy change to mono currency and subsequent depreciation of the Zimbabwe dollar negatively impacted the group’s inflation adjusted expenses which grew by 33% to $433 million from $317 million prior year.

The company’s flagship subsidiary Fidelity Life Assurance contributed 38% to core revenue after realising inflation-adjusted revenue of $335,9 million in 2019 from $266,7 million prior year.

The growth was as a result of a change in accounting policy of investments in subsidiaries from cost to equity method.

The company recorded a premium decrease of 35% as the main source of premiums pension contributions and life insurance come from working population whose salaries were below price inflation.

The group’s Vanguard life assurance company in Malawi recorded a 75% growth in revenue at $57,8 million, therefore, contributing 38% to core revenue. The growth was a result of the devaluation of the Zimbabwe dollar against the Malawi kwacha.

Another subsidiary Fidelity Life Financial Services recorded inflation-adjusted core revenue of $23 million from $25,3 million prior year.

The company said it held a land bank of 847 hectares on its Langford Estates which it viewed as a hedge against hyperinflation.

On the outlook, the company said in the absence of market confidence the country’s foreign currency inflows will improve but pressure on the local currency unit is expected to remain in the short to medium term.

“We thus expect the current harsh economic environment to persist, the persisting hyperinflationary environment makes it imperative that we execute a strategic initiative that preserves value for policyholders and shareholders,” said Ruwende.