Online Reporter
Business Writer
First Mutual Life Assurance Company (FML) has said it continues to work with the Insurance and Pensions Commission (Ipec) to bring finality to the issues identified in a forensic audit on the company.
In 2022, FML, a subsidiary of First Mutual Holdings (FMHL), underwent a forensic audit by Ipec following an asset separation exercise, which revealed potential breaches of compliance and likely prejudice to policyholders.
Findings of the audit revealed that FML had not properly separated assets between the policyholders and shareholders, leading to potential losses for policyholders.
Group chairman Amos Manzai, in a statement of financials for the year ended December 31, 2024, said following the withdrawal of the Corrective Order, FML and Ipec came to a settlement agreement.
“This agreement incorporated steps to resolve outstanding issues. This included the appointment of independent experts to consider reviewing issues in contention,” he said.
He added that the independent experts submitted their findings, which FML has accepted, and Ipec subsequently asked FML to resubmit some information that had already been supplied and to provide some additional information, which was done.
According to Ipec, the asset separation exercise was necessitated by the notable non-compliance by several insurance companies against the aforementioned legal requirements, which had the potential to prejudice policyholders in favour of shareholders.
The assessment done by Ipec sought to verify the extent to which FML complied with the provisions on asset separation, which the regulator said warranted an in-depth investigation.
The objective of the asset separation exercise was to enforce compliance with the requirements of the new industry legal provisions.
The exercise was done to identify assets that may have been misappropriated from policyholders to shareholders or vice versa, quantify the assets that may have been misallocated and apportion them to their rightful owners, and enhance compliance with the legal requirements for asset separation as a way of improving good governance in the insurance and pension sectors.
In the year to December 31, 2024, First Mutual Life achieved insurance contract revenue (ICR) of US$10,5 million, representing growth of 24 percent compared to the prior year.
“The growth from the comparative period was largely due to client migration from local currency-denominated policies on Group Life Assurance policies in line with the general trend to convert a portion of USD-denominated allowances to pensionable basic salaries,” said Mr Manzai.
Profit for the period was US$0,8 million, a 26 percent decline from the previous year, with the negative variance mainly arising from exchange losses on local currency-denominated monetary assets in the first and third quarters of the year when there was accelerated depreciation of the local currency (Zimbabwe dollar and ZiG, respectively).
