FIDELITY Life Assurance (Fidelity) says its revenues grew by 88 percent during the first five months of the year helped by improved business from its Malawi unit.
This comes as the Zimbabwe Stock Exchange-listed life assurance group, which recently reported its second consecutive annual loss on the back of a deteriorating operating environment in the country, has increased its shareholding in the Malawi business from 57 percent to 62 percent.
Reuben Java, Fidelity’s chief executive, last week told shareholders at the company’s annual general meeting that total revenue grew 88 percent to $25,4 million up from $13,5 million in the same period last year, driven by gross premium income which contributed 80 percent to revenue.
“Gross premium income grew 176 percent from $7,4 million to $20,4 million, largely driven by the company’s Malawi subsidiary, Vanguard Life Assurance Company (VLA)’s, which saw revenue growing 638 percent,” he said.
The insurance giant is also banking on the Malawi business to help it keep afloat this year in the face of deteriorating economic conditions in Zimbabwe.
This comes at a time Fidelity chairman Fungayi Ruwende had early this year predicted that VLA’s “country diversification value will come to the fore in 2019 as Zimbabwe spirals into high inflation”.
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Ruwende noted that the Malawi “subsidiary remains a key strategic asset to the group and the capital injection will protect the subsidiary’s continued operation in Malawi”.
This was after VLA had called for a rights issue last year to raise capital aimed at meeting new minimum shareholder’s equity requirement set by the Reserve Bank of Malawi.
“Fidelity participated in the rights issue on December 31, 2018 at an amount of $541 590, resulting in an increase in the group’s shareholding to 61,77 percent from the previous 57,92 percent,” he said.
Meanwhile, the company continues to suffer on the local front.
Java said developments in the economy, since November 2018, had increased negative pressure on revenue and adverse cost pressures.
“Outside of the so-called hardship allowances to cushion employees, salaries and wages across the economy have largely been stagnant, actually declining in real terms because whatever choice of price inflation you choose to look at, it is way above any salary increases that may have been granted, if at all.
“It’s a scenario where prices for basic goods are escalating at much higher levels compared to wages, which means the share of wallet towards insurance has been diminishing,” Java said.
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