Fidelity profit dips 43pc

Business Reporter
Fidelity Life Assurance’s profit for the six months to June plunged 43 percent to $1,2 million compared to the same period last year.
The sharp decline in profits was attributed to fair value losses in the investments portfolio due to depressed prices on the Zimbabwe Stock Exchange.The life assurance unit leveraged group performance with gross premium of $6,5 million, giving underwriting surplus of $2,6 million.

In a statement, Fidelity said group revenue during the interim period under review increased by 15 percent to $7,9 million compared to the same period last year, largely driven by the life assurance unit.

The Malawi subsidiary, Vanguard Life Assurance, posted gross premium income of $1,4 million and underwriting surplus of $800 000. The medical aid unit managed $160 000 surplus.

The group said the Sudan joint venture continues to show potential. Focus has now been put on enhancing strong business structures, reliable clientele, internal controls and information systems.

Fidelity Life Assurance has since applied for doubling of its bond limit to $10 million bond limit after its initial floatation for $5 million was oversubscribed by an equal amount.

This follows setting up of a special purpose vehicle to raise $5 million for development of its low cost residential property, Southview Park, 19 kilometres along Harare-Masvingo road.

Chairman Mr Lawrence Tamayi said that Fidelity was developing 5 300 stands, in addition to other amenities needed for the properties.

“A bond for $5 million, with prescribed asset status was oversubscribed by $5 million and we have applied for the (new bond) limit to be raised to $10 million. The funds raised (from the bond) will be deployed to the development of the Fidelity Life Southview Park infrastructure,” Mr Tamayi said.

According to the company’s prospectus, the initial $5 million targeted under the $5 million bond was meant to fund installation of an 11km 500mm bulk water pipe at a cost of $2 675 million.

It was also earmarked for elevated water tanks with a capacity of 15 million litres at budget $2 325 million, a City of Harare pre-condition before development of the park started.

The two projects would satisfy land development permit conditions and this was expected to enable commencement of land servicing on the low cost housing scheme. These developments are expected to accelerate the rate of stand pre-sales, which would fund further development work. Fidelity said it had earned $700 000 single premium income without any claims against the revenue from the project. Southview Park is expected significantly drive future income.