adminTawanda Musarurwa Senior Business Writer
Fidelity Life Assurance says it is looking to bulk up on assets in the region, a move aimed at hedging against inflationary pressures in the local environment.
Rising inflation over the past year, and estimated at around 600 percent according to latest official statistics, has affected local businesses across various sectors.
Fidelity chief executive Rueben Java, said the group is targeting to expand its regional portfolio.
“The group expects the economic challenges in Zimbabwe to persist in the medium-term. The deteriorating economic environment characterised by currency volatility and hyperinflation, is expected to significantly erode the value created by local businesses operations and to threaten the viability of local businesses,” said Java in a statement accompanying the company’ 2019 results.
“Fidelity Life Assurance will improve the quality and colour of its revenue through careful choice of target markets. De-risking Zimbabwe through further country diversification is a key strategic priority for us.”
This comes as the group’s Malawi operation — Vanguard Life Assurance Company — recorded a 75 percent growth in total revenue for the year to December 31, 2019.
The regional operation contributed 38 percent to core group revenue, benefiting from currency devaluation in Zimbabwe.
Vanguard’s premium income rose by 68 percent to $57,8 million from $34,3 million in 2018 as the Zimbabwe dollar weakened against the Malawi Kwacha. The subsidiary posted a profit before tax of $7,4 million, up 823 percent compared to $799,546 in the prior comparable period.
Key subsidiary — Fidelity Life Assurance — contributed a similar 38 percent to core revenue after realising inflation-adjusted revenue of $335,9 million in 2019 from $266,7 million prior year.
Overall, Fidelity Life’s numbers improved in FY2019, as the firm turned a corner from a prior year loss.
The group posted a profit after tax of $74 million during the period under review from a loss position of $3,8 million on the back of revenue growth.
Group revenues rose 52 percent to $503,6 million from $331,9 million during the period buoyed by fair value gains on investment properties. Gains on investment properties grew significantly to $ 371,8 million from $3,1 million in 2018.
“The group’s strategic choice to focus on inflation protection assets and core business resulted in positive results with the group recording a profit after tax of $74,1 million on an inflation adjusted basis during the year ended December 31, 2019,” said group chairman Fungai Ruwende.
Online Reporter