FMHL GPW up 494% y/y to May 31, 2021

Harare-ZSE listed Insurance and Property Management Group, First Mutual Holdings Limited (FMHL) saw its Gross Premium Written (GPW) rising 494% to ZWL$3.92bn by May 2021 vs ZWL$0.66bn in prior year.

Giving the trading update, the Group CEO, Mr Douglas Hoto indicated that an estimated 40% of the revenue was US$ premium translated at the interbank rate.

In the Zimbabwe market, the forex premiums were US$9.2m vs US$1.5m in the prior period as an increased number of clients were preferring to cover in US$ to limit the extend of shortfalls or excesses.

Net Premium Written (NPW) was ZWL$3.1bn, up 504% on prior period.

The Net Premium Earned after adjusted for the UPR was ZWL$2.81bn up 487% from ZWL$0.5bn in prior period.

The growth numbers compared quite favourably with the annual inflation rate of 161.9% for the same period.

Total direct expenses were ZWL$1.8bn an adverse variance of 567% on prior year in response to the benchmarking of costs to alternative market rates by service providers to give an underwriting result of ZWL$0.947bn vs ZWL$0.187bn in prior period.

Rental income was ZWL$153.4m leading to total other income of ZWL$ZWL$0.253bn.

Admin expenses at ZWL$0.837bn were up 471% with total expenses of ZWL$0.881bn leading to an operating profit of ZWL$318.1m vs ZWL$98.5m in the prior period, a growth of 223%.

Investment income was ZWL$2.356bn, a growth of 348%. After factoring fair value adjustments and transfers of policyholder investment income, the profit before tax for the period was ZWL$1.363bn vs ZWL$523m in prior period, a growth of 160% and just in line with annual inflation for the period.

FMHL shares traded on ZWL2560 cents on the ZSE on 29 June representing a market cap of ZWL$17.7bn and is up 167% YTD and 592% y/y. In US$ the market cap is US$206.8m at the interbank rate and US$135.9m at the alternative market rate.

FMHL is currently the subject of a significant tender offer by the major shareholder NSSA which is disposing 31.22% shareholding in the Group and intending to remain with 35% in line with ZSE listing requirements.

It is not yet clear who the front runner for the stake is with indications being that local and international investors did submit bids for the stake.