Staff Writer
HARARE, First Mutual Holdings (FMHL) says the existing economic environment requires continuous engagement with customers to maintain the relevance of products.
FMHL is a financial management group in Zimbabwe offering services in risk management, wealth creation, wealth management, insurance, reinsurance, and property.
Group chief executive Douglas Hoto, in a statement of financials for the half-year period to June 30, 2024, said the business has a solid financial position and will continue to invest in technology.
“This, coupled with diversified revenue streams as well as the growing contribution of regional businesses, is expected to contribute towards sustainable growth and value creation for our stakeholders.
“We will continue investing in technology to improve service delivery channels and product innovations as part of our strategy to meet evolving market requirements,” he said.
Hoto said the group focused on maintaining the relevance of its products in the core pillars of risk management, wealth creation, and wealth management.
“There was an increasing preference by clients for USD-denominated products to ensure that the value of the insurance benefit was retained. 83 percent of the group’s insurance contract revenue was in USD for the six months ended June 30, 2024,” he said.
The group’s insurance contract revenue (ICR) for the half-year period increased by 160 percent compared to the prior period, mainly due to the International Financial Reporting Standards (IFRS)-related distortions that result in the understatement of the revenue for 2023.
During the period under review, Hoto said the group incurred a loss after tax of US$33 million compared to a profit of US$56 million.
“The significant drop from prior year stems from distortions arising from following the provisions of IFRS,” he said.
He noted that major distortions to the group’s performance were noted on investment property that was valued in the prior year in ZWL, which, when translated to USD, following IFRS guidelines, resulted in a valuation of US$178 million on 31 December 2023 compared to the independent USD valuation of U$128 million.
“This was the driver for the fair value loss on investment property of US$50 million,” said Hoto.
In terms of individual operations review, First Mutual Health Company’s insurance contract revenue (ICR) for the period to June 2024 was US$27,9 million, 25 percent above the previous year figure of US$22,4 million.
“The growth in revenue was largely driven by the higher contribution of the more stable USD and increased membership,” said Hoto.
During the interim period, the business achieved a profit for the period of US$3.7 million, representing a 29 percent decrease from the prior year, with the decline mainly due to lower investment income and an increase in the company’s claims experience following the migration to USD policies, which provide relatively stable benefits.
Hoto said the business continues to expand its network of medical services—clinics, pharmacies, hospitals, dental and optometry—as a long-term strategic priority.
“Our objective is to complement government efforts to provide greater access for Zimbabweans to quality healthcare at affordable prices,” he said.
First Mutual Life achieved an ICR of US$6 million, which represents a growth of 43 percent compared to the prior year.
Hoto said the positive variance from the comparative period was largely due to client migration from local currency-denominated policies on the Group Life Assurance Policy in line with the general trend to convert a portion of USD-denominated allowances to pensionable basic salaries.
“The business achieved a lower profit for the period of US$0.4 million relative to US$1.9 million in the prior year. The negative variance mainly arose from lower investment income and exchange losses on local currency-denominated assets in the first quarter of the year when there was accelerated depreciation of the ZWL,” he said.
In the general insurance cluster, NicozDiamond Insurance ICR grew by 25 percent to US$19.8 million from the prior year due to increased foreign currency-denominated business and organic growth.
“…as well as the upward review of statutory covers to track the local currency depreciation and premium rate reviews for specific accounts mainly driven by unfavourable loss ratios.,” said Hoto.
The business recorded a profit after tax of US$0.7 million, 65 percent higher than the same period last year, and the improved performance was mainly driven by a notable ICR increase, which compared favourably to the lower growth on the main expense items.
The Diamond Seguros business recorded ICR of US$2.3 million, which was 17 percent above the prior year amount, and the growth was a result of continued improvements in broker business following the recapitalisation of the business by the group in 2021.
First Mutual Reinsurance: Zimbabwe’s ICR declined to US$6.6 million from US$8 million following a deliberate decision to limit exposure to certain classes as part of risk mitigation.
FMRE Property and Casualty—Botswana ICR for the period went up by 7 percent to US$11.7 million, and the year-on-year growth was 11 percent in Botswana Pula (“BWP”), at BWP158.7 million from BWP143 million in the prior period.
