Investment profit lifts First Mutual Holdings in six months to June 2017
Insurance24 Reporter
HARARE, First Mutual Holdings after tax profit for the six month period ended 30 June 2017 increased 63% to $4.3 mln compared to $2.6 mln same period in 2016 largely driven by increased investment income.
Group chief executive officer Doug Hoto told an analyst briefing that FML had an investment profit of $13 mln compared to $0.5 mln in 2016 with the favorable outturn mainly a result of an increase in the fair values of counters held by the Group on the Zimbabwe Stock Exchange (ZSE).
“The group also increased it’s held to maturity investments which resulted in an increase in net interest income,” he said.
During the period under review, Gross Premium Written (GWP) went up a marginal 1% to $61.5 mln compared to $60.6 mln in 2016. The slight increase in GWP is a result of growth in the health business, life assurance and property and casualty insurance segments that was offset by the 18% decline in pensions business driven by a slump in single premiums.
Group operating profit before factoring in investment performance was down 61% to $1.6 mln compared to $4.2 mln same period in prior year.
The major contributing factors to the lower operating profit were higher claims particularly in agriculture under the reinsurance segment as well as higher claims ratio in health insurance.
In terms of SBU’s performance, First Mutual Health Company saw GWP for the period growing 8% to $28.1 mln compared to $26.1 mln in 2016 mainly attributable to an increase in corporate members as the First Mutual brand becomes more prominent in the market.
Total incurred however increased 14% from $20.2 mln in 2016 to $23 mln, resulting in the claims ratio increasing to 82% compared to 78% same period prior year.
“The company continues to seek new business through provision of quality service, demonstrated claims paying ability, wellness campaigns, innovative products and competitive pricing to its members,” Hoto said.
First Mutual Life Assurance achieved a combined GWP of $16.7 mln for both Life Assurance and Pensions and Savings businesses, a decline of 9% relative to the comparable period.
Pensions and Savings GWP declined 18% to $9.4 mln from $11.6 mln in 2016 mainly due to the 41% fall in single premiums which normally arise when employees leave employment through retirement, resignation or retrenchment.
The decline in single premiums was partially offset by the increase in Individual Life Business cash accumulations that went up 16%. Claims and benefits declined to $7.1 mln.
Life Assurance saw the shareholder risk business GWP, comprising Group Life Assurance, and Individual Life Assurance products growing 7% to $7,3 mln compared to $6.8 mln in 2016 mainly driven by eFML, a mobile based funeral cash plan product launched in 2014.
First Mutual Reinsurance saw the Property and Casualty segment achieving a marginal GWP increase to $10.6 mln from $10.5 mln in 2016 largely as a result of increased agriculture business that was partially offset by the decline in regional business as the uncertainty around remittance of funds from Zimbabwe is having an adverse impact on the acquisition of regional business.
Claims at $5.1 mln increased from $2.5 mln mainly due to high agriculture business claims resulting in significantly higher claims ratio of 88% from 42% last year same period. There was a surge in tobacco hail claims which affected the whole country.
Life and Health segment GWP for the six month period at $1 mln was 38% below $1.6 mln last year comparable largely as a result of a strategic decision to scale down on regional health business that had high claims which led to operating losses for this class.
FMRE property and Casualty Botswana registered increased market confidence in the company. Tristarinsurance GWP increased 24% to $2.6 mln compared to $2.1 mln in 2016 with the positive growth mainly attributable to retention of the majority of the existing book and new business acquired due to increased market presence.
FML Property registered a 9% decline in revenue to $3.9 mln mainly due to rental income declining 8% to $3.7 mln compared to $4 mln in 2016.
The decrease was mainly driven by reduced rental rates across the property portfolio. First Mutual Wealth management business achieved investment fees of $0.7 mln compared to $0.6 mln same period in 2016 with the favorable result reflective of the increased funds under management.
