Ipec investigates First Mutual Life Assurance Company

Ipec investigates First Mutual Life Assurance Company

Staff writer

First Mutual Holdings Limited (FMHL) says the Insurance and Pensions Commission (IPEC) intends to perform a forensic investigation on its subsidiary First Mutual Life Assurance Company (FML), arising from the asset separation exercise initiated by IPEC.

FMHL in a statement said IPEC has deemed the submissions made by FML not to be adequate to enable completion of the review of asset separation at FML.

“FML is therefore consulting with IPEC to understand the areas of inadequacy and will continue to work closely with the Regulator to resolve the outstanding issues in the shortest possible time.

“As these developments may have a material effect on the price of the company’s securities, shareholders are advised to exercise caution when dealing in the company’s securities pending conclusion of the investigation,” the group said in a statement.

FML, the second-largest life assurance company in Zimbabwe by market share that also provides retirement, medical insurance, micro-insurance and other long-term financial security products, has also effectively defied the law on separation of insurance and pension businesses due to internal squabbles over the issue, which has led to some executives being removed.

Zimbabwe’s leading financial services conglomerate, CBZ Holdings, took over FMHL to build a business behemoth in the local and regional markets.

Ipec is established in terms of the Insurance and Pensions Commission Act [Chapter 24:21] to regulate the insurance and pensions industry with the objective of protecting the interests of policyholders and pension scheme members.

The commission reports to the ministry of Finance. It began operations in 2005 after it was weaned off the ministry. Benefits expected from the ongoing verification exercise include:

  • Identifying assets that may have been misappropriated from policyholders to shareholders or vice versa;
  • Quantifying the assets that may have been misallocated and apportioning them to their rightful owners; and
  • Enhancing compliance with the legal requirements for asset separation as a way of improving good governance in the insurance and pension sector.

The project, which is being done at industry level, is now at the tail end.  Conclusion of this project will inform additional regulatory and governance reforms as well as controls to ensure transparency, fairness and equity between policyholders and shareholders.

The pensions industry has remained resilient in the face of Covid19-induced challenges and high inflation in the past few years.