Innovation, strategic partnerships strengthens FMHL resilience

Innovation, strategic partnerships strengthens FMHL resilience

Staff Writer

HARARE, DOUG Hoto, the First Mutual Holdings Limited, chief executive, says despite the turbulent economic environment, the Group remained solid on its key competences to mitigate against loss of value in 2019.

“Despite the turbulent economic environment, the Group remained focused on delivering its promise on the core pillars of risk management, wealth creation and wealth management during the year ended 31 December 2019,” he said in the group’s annual report.

He noted that economic developments and policy pronouncements during the year, had a significant impact on the operations of the Group.

But through initiatives such as product innovation, service excellence and strategic partnerships, “We were able to mitigate the loss of value for our customers,” said Hoto.

During the period, he said, the Group increased its investment in Diamond Seguros, a short- term insurer in Mozambique.



First Mutual Health Company (Private) Limited – On an inflation adjusted basis, the GPW decreased by 30% to $361.7 million in 2019 due to sub-inflationary increases in premium rates as most clients were not in a position to absorb full increases. The claims ratio declined from 77.7% to 72.7%, reflecting lower usage by members due to higher shortfalls as reimbursement levels fell behind the frequent price increases by service providers. According to Hoto, the business continues to improve service provider reimbursement levels while membership increased from 135 999 in December 2018 to 144 215 in December 2019.


First Mutual Life Assurance Company (Private) Limited —-GPW decreased by 47% to $188.2 million in 2019 reflecting the below inflation adjustments to basic salaries that drive the Employee Benefits (pensions and group life assurance) division. Hoto said there was a market-wide trend whereby employers preferred paying allowances rather than increasing basic salaries as the economy migrated to a mono-currency environment.

“Revenue growth was also negatively affected by the slow pace in increasing life cover amounts in the individual life division.”


NicozDiamond Insurance Company Limited GPW grew by 17% to $448 million in 2019. The growth was attributed to USD business written in the period to June 2019, new business and the general revision of sums insured to median rates between interbank and alternative market rates. The claims ratio was 43% (2018: 51%) due to a lower claims growth rate relative to premiums.


First Mutual Reinsurance Company Limited – Zimbabwe GPW decreased by 3% to $156.1 million in 31 December 2019. The decrease was due to clients’ limited capacity to match the growth in the USD: ZWL exchange rate in revision of sums insured and hence premiums. The claims’ ratio improved to 56% in 2019 from 59% in 2018.

FMRE Property and Casualty (Proprietary) Limited Botswana GPW grew by 186% to $242.6 million in 2019. The growth was 53% in Botswana Pula (“BWP”) terms driven by improved local and international treaty participation, USD business retroceded by the Zimbabwe business and growth of specialist lines of business under the casualty segment. The claims ratio increased to 38% in 2019 from 29% in 2018, aligning with industry trends.


First Mutual Properties Limited Revenue declined by 12% to $58.1 million in 2019. The decrease was due to lower than inflation rental review rates. However, there was an improvement in occupancy rates from 76.1% in 2018 to 85.6% at the end of 2019. Independent investment property valuations as at 31 December 2019 resulted in significant increases in the portfolio value.

First Mutual Wealth Management (Private) Limited Investment fees decreased by 22% to $7.8 million in inflation adjusted terms mainly due to the below inflation performance of some components of funds under management such as quoted equities.

The ZSE Industrial Index rose by 57% during 2019. During the year, the business made significant strides in attracting third- party funds and this trend is expected to continue.


In the short term the coronavirus (“COVID19”) pandemic has diminished the growth of the global and Zimbabwean economies. This has negative impact on the growth prospects of the Group. The pandemic is still unfolding and therefore requires continuous monitoring and assessment. In that regard the Group has established a COVID19 Committee and mandated it to formulate and implement strategies to minimise the impact of the pandemic on the Group. The initial focus of the Committee is to minimise the impact of the pandemic on the continuous service delivery to our customers as well enhancing their safety and that of our staff members in our premises as they offer service in this environment.

“Through initiatives such as product innovation, service excellence and strategic partnerships, we were able to mitigate the loss of value for our customers,” said Hoto.

Statement of comprehensive income

GPW decreased by 11% from prior year and increased in historical cost terms by 213% due to revision of sums insured in sympathy with the movement in the USD: ZWL exchange rate and the prevailing high inflation.

Rental income for the year amounted to $52.5 million and was ahead of prior year by 3% in inflation adjusted terms and by 203% in historical cost terms. The growth, relative to prior year, is due to quarterly rental reviews and increases in occupancy rates in retail and residential properties.

During the period under review, the Group achieved significant revenue growth but also faced increased operating expenses due to inflationary pressures.


At the beginning of the year Zimbabwe was using a multi-currency system with RTGS bank balances and bond notes at an exchange rate of 1:1 with the United States of America Dollar (“USD”). On 22 February 2019, the Reserve Bank of Zimbabwe (“RBZ”) floated the local currency at an introductory rate of USD1:RTGS$2.5 through Statutory Instrument (“SI”) 33 of 2019. On 24 June 2019 the multi-currency system was abolished in favour of the ZWL as a mono-currency, through SI 142 of 2019.

These developments had various impacts on the Group with insurance subsidiaries precluded from writing local USD denominated policies with effect from 24 June 2019.

The Group was also exposed to foreign obligations relating to periods prior to 22 February 2019 (“legacy debts”) when the USD and RTGS$ were segregated. The legacy debts amounting to USD1.9 million which arose from retrocession premiums, regional claims and information technology costs were submitted to the RBZ for approval. These liabilities have been recorded in the financial statements at the interbank rate.


The Board resolved that a final dividend of ZWL0.35 cents per share be declared in respect of all ordinary shares of the Company, bringing the total dividend for the year ended 31 December 2019 to ZWL0.55 cents per share. The dividend will be payable on or about 12 June 2020 to all shareholders of the Company registered at close of business on 29 May 2020. The shares of the Company will be traded cum-dividend on the ZSE up to the market day of 26 May 2020 and ex-dividend as from 27 May 2020.