First Mutual Life foreign currency business hits US$14,7 million – NewZimbabwe.com

By Alois Vinga

LISTED insurance giant, First Mutual Life (FML) has recorded growth in US$ denominated business reaching US$14, 7 million in the first quarter of the year and in the firm’s other portfolios.

Presenting a trading update recently, FML group company secretary, Sheila Lorimar said the US$ denominated business has been recording significant growth over the years.

“The proportion of the US$ business being written by the group constituted 53% of the total insurance contract revenue at US$14,7 million compared to 54% in the same period last year,” she said.

The Reserve Bank of Zimbabwe (RBZ) has it on record that foreign currency generation in the economy continues on a steady rise with the greenback dominating most transactions at a ratio of 70:30 against the ZW$.

On the insurance front, locals perceive US$ denominated investments as solid and bankable in times of currency depreciation uncertainties.

In ZWL terms, FML insurance contract revenue at $25,9 billion grew by 497% compared to the same period in prior year attributable to continued revaluation of insurance policy values to match inflation and exchange rate movements to ensure adequate cover for clients as well as a migration of more policies to the US$.

During the period, the Insurance service result grew by 446% to $3, 8 billion compared to the prior period. The growth is a result of increases in the insurance contract revenue as well as improved retention of the same as demonstrated by growth of the net reinsurance revenue.

In the period under review, FML property segment saw rental income growing by 584% to $1,4 billion.

The growth arose from a combination of factors which included a higher proportion of US$ denominated leases as well as inflation driven on ZWL rental rate increases.

The occupancy levels stood at 85% compared to prior year of 90% and the average rental/square metre was US$ 4,73 compared to prior year of USD4,61.

The overall Group net investment returns amounted to $7,9 billion, 159% above prior year. The growth was driven by recoveries on the ZSE.

“The group will strive to continue to provide a compelling value proposition to clients by maintaining the relevance in its products and delivering on its promise thus achieving sustainable operations.

“We will also pursue value enhancing initiatives such as investments in real assets in order to preserve and grow the balance sheet in the current hyperinflationary environment,” added Lorimar.