Staff Writer
First Mutual Holdings Limited (FMHL)’s insurance businesses recorded growth in the first half of the year, but rising claims and acquisition costs continued to put pressure on underwriting margins, highlighting the need for greater claims and cost management.
The diversified financial services group increased insurance contract revenue by six percent to US$92,8 million in the six months ended June 30, 2026, supported by customer retention, new products and disciplined underwriting.
However, the insurance service result declined seven percent to US$13,1 million as higher claims and insurance contract acquisition costs eroded part of the revenue gains.
Group chief executive officer Douglas Hoto said the group would focus on improving underwriting efficiency during the second half of the year.
“We remain focused on enhancing underwriting efficiency and expect this metric to improve in the second half of the year,” he said.
The results highlight the contrasting trends within FMHL’s insurance portfolio, with most businesses recording revenue growth while claims experience and operating costs remained key pressures.
The health insurance business was a major contributor to revenue, with First Mutual Health Company increasing insurance contract revenue by three percent to US$39,7 million from US$38,4 million.
The growth was attributed to increased membership and contribution reviews.
However, the company’s claims ratio increased to 83,95 percent from 82,15 percent, reflecting higher claims volumes.
FMHL attributed the increase mainly to a growing chronic disease burden and higher claims frequency.
Despite the increased claims ratio, First Mutual Health Company’s profit surged to US$8,7 million, representing a 2 828 percent increase from the prior year, supported by improved operating performance and higher investment income.
The higher claims ratio nevertheless remains an important indicator for the business because sustained growth in claims relative to premiums can place pressure on the ability of medical insurers to maintain margins.
First Mutual Health Services recorded a relatively flat performance, with revenue increasing 0,3 percent to US$5,1 million.
Profit declined six percent to US$0,2 million, reflecting higher operating costs associated with business development, infrastructure and capacity-building initiatives.
The life insurance business performed more strongly.
First Mutual Life increased insurance contract revenue by six percent to US$8 million, driven by growth in group risk schemes and retail funeral products.
Profit rose to US$3,2 million, supported by revenue growth, cost management and a favourable investment outturn.
In general insurance, NicozDiamond Insurance recorded an 11 percent increase in insurance contract revenue to US$21,5 million.
The growth was driven by new business in the marine, accident and motor classes.
Profit after tax increased 271 percent to US$5,1 million, although the improvement was largely supported by fair value gains on investment property.
The performance points to continued expansion of the insurance book, with new business providing a key source of revenue growth.
Diamond Seguros, however, experienced a contraction, with insurance contract revenue declining eight percent to US$2,3 million following non-renewals.
Revenue in local currency terms fell to 146,6 million meticais from 159,8 million in the previous year, while the business recorded a US$0,1 million loss.
The loss was largely attributed to adverse reinsurance performance.
The group’s reinsurance operations provided additional support to the insurance portfolio.
First Mutual Reinsurance Zimbabwe increased insurance contract revenue by four percent to US$8,4 million, supported by expansion of its treaty portfolio and deeper relationships with cedants, including wider regional risk coverage.
Profit rose to US$3,4 million, although the sharp increase was largely driven by exceptional investment performance.
In Botswana, FMRE Property and Casualty recorded stronger growth, with insurance contract revenue increasing 14 percent to US$13,8 million on the back of continued portfolio expansion and new business acquisition.
Profit after tax rose 45 percent to US$1,5 million, supported by stronger investment returns.
Across the insurance portfolio, the results therefore show that FMHL is continuing to expand its premium and insurance contract base, but the quality of that growth will depend increasingly on claims management and underwriting performance.
The group’s investment portfolio provided an important earnings cushion during the period.
Net investment return increased 568 percent to US$13,7 million, while fair value gains on investment property rose 1 257 percent to US$13,8 million.
While these gains strengthened the group’s overall performance, they also underline the importance of distinguishing investment-driven earnings from recurring insurance profitability.
For FMHL, stronger and more sustainable insurance earnings will ultimately depend on its ability to keep claims growth under control while maintaining sufficient pricing to reflect underlying risks.
This is particularly relevant in health insurance, where the rising claims ratio points to growing pressure from medical utilisation and chronic conditions.
For policyholders, the results also reinforce the need to assess insurance cover on more than price. The level of benefits, exclusions, claims service, financial strength and the insurer’s ability to maintain sustainable premiums are important considerations when choosing or renewing cover.
Mr Hoto said the group would continue adapting its products to changing customer needs and market conditions, while pursuing further diversification and investment in real assets.
For FMHL, the second half of the year will therefore be closely watched for evidence that the group’s revenue growth can translate into improved insurance service results and stronger underwriting margins.
