adminin that country.
Managing director Mr Simon Chapereka said the fundraising initiative would result in Fidelity shareholding being diluted from the current 67 percent to 51 percent.
Solvency requirement is the amount of capital required to cover policyholders funds and when the company underwrites more business. Fidelity operates Vanguard Life Assurance in Malawi, which posted US$588 000 profit as at June 30, 2011.
Mr Chapereka told The Herald Business that the group is buoyed by both its local and regional operations with the regional operation presenting greater opportunities for the company.
“Following the passing of the Finance Bill in Malawi that makes it mandatory to open up pension funds, it presents huge growth for the company,” said Mr Chapereka.
Fidelity has already acquired 18 pension schemes since the passing of the bill.
Mr Chapereka added that the company has also launched the Mudharabha Fund, a Sharia compliant investment product, and the only scheme of its kind in Malawi.
The fund, which taps into Muslim funds, is expected to create more underwriting business for the firm and provide the much needed liquidity.
Sharia compliant products are consistent with the principles of Islamic law, prohibit the fixed or floating payment or acceptance of specific interest or fees.
While these principles were used as the basis for a flourishing economy in earlier times, it is only in the late 20th century that a number of Islamic banks were formed to apply these principles to private or semi-private commercial institutions within the Muslim community.
Mr Chapereka said this presents great potential for the company.
“We are excited about this initiative and developments in that market”.
Going forward, management is confident of surpassing its bottomline of US$8,8 million by year-end.
Fidelity is so far the best performer on the local bourse after gaining about 300 percent year-to-date after opening the year at US2c to US15,30c.
Analysts say as all its units continue to trade strongly and profitably and the group’s share price is expected to close the year just above US23c.
The group has also re-opened the Chiredzi branch and they are writing meaningful business there.
As at June 30, 2011 the group had an underwriting surplus of US$2,4 million.
Investment income was at US$1,2 million from a loss of US$192 212 recorded last year, US$983 507 came from fair valuation equities and US$261 281 came from realised equities.
This resulted in the profit for the period of US$5,1 million up from US$1 million recorded during the same period last year.
Fidelity operates medical aid business, life and funeral assurance, financial services and an asset management firm.
Zimbabwe’s insurance sector has been tracking economic growth despite the slow take up of the manufacturing sector that has been hit by liquidity and skills problems.
Zimbabwe’s insurance sector is estimated to have grown from about 2 percent to 4 percent during the past 12 months.
It is also anticipated that there has been an increase in insurance uptake in the country and insurance rates are on the upside.
However, the insurance industry remains over traded with 28 players.
The sector is flooded due to minimal capital requirements of US$300 000.
Online Reporter