Fidelity Life in the red

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BH24 Reporter
HARARE – Fidelity Life Assurance of Zimbabwe slipped into the red after posting a loss after tax of $1, 3 million for the year to December 31 2017, from $6, 4 million profit in the prior comparable period.

The loss came on the back of various shareholder write-offs and impairments.

Notwithstanding the challenging operating environment in the year, revenue for the group rose 7 percent to $55, 9 million compared to $52 million.

Gross insurance premiums fell 7 percent to $14, 2 million compared to prior year’s $15, 4 million. Sales of stands from the Southview Park were 4 percent lower at $23, 4 million.

The two lines of revenue combined contributed to 67 percent of the group’s revenue, compared to 75 percent in the prior year.

“These reductions in core income were however cushioned by significant increases in investment income during the year, the most significant being fair value gains of $4, 5 million recorded on listed equities, compared to $0, 6 million in 2016,” said chairman Fungai Ruwende in a statement accompanying the results.

Claims reduced by 41 percent to $4, 9 million from $8, 3 million in the prior year.

The group’s flagship, Fidelity Life Assurance recorded a 17 percent decrease in premiums to $12, 9 million on shrinkage of business by its clients who downsized operations and restricted uptake of assurance products.

The unit recorded a $0, 06 million loss, representing a 101 percent decline from prior year’s profit of $5, 6 million due to asset write offs and impairments.

Malawi business, Vanguard, recorded an increase in premium arising from growth due to new business. Premium income increased 40 percent to $3, 5 million.

The unit however reported a loss for the year of $0, 6 million.

The micro-finance unit recorded a 29 percent increase in profit for the year to $1, 3 million, while the actuarial consulting business and the Asset Management Company posted modest profits.

Concerning the write-off, Ruwende however indicated there was no prejudice to policy holders as the write offs were fully provided against shareholder funds.

A forensic audit was performed on Fidelity following alleged irregularities in business operations and performance by the firm’s former management.

“Also emanating from the forensic audit are restatements to the financial statements for the year ended 31 December 2016, firstly to reflect appropriate revenue recognition principals in line with International

Accounting Standard (IAS) 18 ‘Revenue’, with regard to revenue from sale of residential stands under the Southview Park project.

“In addition, certain restatements recorded arose from vanguard life assurance,” said Mr Ruwende.

Going forward the chairman said the group remained upbeat of the opportunities ahead and would continue focus on sharpening its distribution models, finding new markets and customer engagement.

“Re-emphasis of the core insurance business, maximising group synergies, responsible cost Management and debt restructuring will be key,” he said.

The board did not declare a dividend for the year ended.

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