FMHL to leverage on diverse business portfolio

FMHL to leverage on diverse business portfolio

Staff writer

First Mutual Holdings limited says it will continue to leverage on its diverse business portfolio, strategic partnerships, as well as its regional footprint to sustain a positive growth trajectory in the future.

This is coming at a time  the group  capacitated its insurance subsidiary in Mozambique, Diamond Seguros, to meet regulatory capital requirements and capacitating the unit to underwrite health insurance business.

“Despite the uncertainties brought by the pandemic, the Group’s solid balance sheet, coupled with a diversified business model, is expected to deliver sustainable growth and value creation for all our stakeholders.

“We have confidence in the country’s medium-term economic prospects and will thus continue to invest in core businesses and complementary areas.” said group CE Douglas Hoto in a statement of results.

During the period FMHL health business GWP, on inflation adjusted basis, by 111% to $1.9 billion mainly due to revision of contributions to maintain the ability to continue meeting the expectations of members as health service costs increased in real terms.

The segment also experienced growth in foreign currency denominated premiums which tend to have lower shortfalls with the claims ratio increasing to 86.67% from 66.55% owing to increased access to services by members and higher charges by service providers.

However membership declined from 131,196 members in December 2020 to 116,982 members by June 2021 indicating the continued negative impact of the COVID-19 pandemic on the capacity of some clients to continue paying for membership.

The group’s short term insurance business, NicozDiamond Insurance Company Limiteds’ GPW grew by 62% to $1.7 billion driven by asset revaluations to protect clients against insurance value erosion through inflation and organic growth within the existing portfolios.

There was an increase in preferring USD denominated policies to hedge against insurance value erosion in local currency due to high

inflation.

The claims ratio was in line with prior year at 41% (2019: 40%) as national lockdowns continued into 2021.

“Diamond Seguros Diamond Seguros migrated from an associate to a subsidiary with effect from 1 December 2020. GPW grew by 81% in 2021 as a result of improved broker business due to improved confidence after recapitalization of the business in the third quarter of 2020.
In Mozambican Metical (MZN), the growth was 31% to MZN100.6 million.

The claims ratio at 29% was higher than the comparative period of 22% due to the stricter lockdowns in 2020,” Hoto said.

The Group recently obtained regulatory approval to inject US$900,000 through a rights offer to ensure that the company exceeds the minimum regulatory capital level.

First Mutual Reinsurance Company Limited’s GPW increased by 98% to $427.6 million mainly due to improved business written in foreign currency with the reintroduction by the authorities in July 2020 of the policy permitting the payment for goods and services in local and foreign currency led to an increase in USD policies which resulted in more business for reinsurers in the first half of the year.

The claims ratio improved to 30% in 2020 from 52% in 2020 due to lower claims partly due to national lockdown measures.