Fidelity in profit jump in six months to June

Fidelity Life says it recorded inflation adjusted profit before tax of $596,5 million for the period ended 30 June 2020 compared to $32,8 million recorded prior year comparative.

This is after total inflation adjusted revenue for the period increased by 162 percent to $1 372.4 million from $523.2 million recorded in 2019.

The revenue was boosted by fair value gains on investment properties which increased from $250.7 million in June 2019 to $975.1 million, the company said.

However, despite the growth, core insurance and noninsurance revenue generally lagged inflation.

Meanwhile expenses grew at a slower rate than the growth in revenue.

The Group’s inflation adjusted expenses for the current period grew by 58 percent to$775.9million from $490.3 million recorded in same period in 2019.

The main contributing factor to increase in total expenses is change in insurance and investment contract liabilities, the company said.

Change in insurance and investment contract liabilities increased from $143.1 million in June 2019 to $402.3 million in June 2020.

On the balance sheet, the group’s total assets grew by 72 percent in real terms from $2 702.2 million as at 31 December 2019 to $4 639.0 million as at 30 June 2020.

According to management the significant driver of this growth was revaluation of investment properties and equity investments.

To continue on this growth path, the Group said it is embarking on balance sheet restructuring initiatives to fully optimise key assets to improve solvency and financial performance.

It said lessons from the 2008 hyperinflation era guided the company to adopt strategic asset preservation initiatives to protect the balance sheet, crystallise earnings by deliberately increasing weight in hyperinflation resilient investment assets in order to preserve value for policyholders and shareholders.

“This strategy has assisted the Group to maintain a profit trajectory despite the negative operating environment.

“The Group is now on a clean growth path,” chairman Fungayi Ruwende said in a statement accompanying the results.

He said the Group had also seen opportunities in other areas and had since set up a Bureau De Change to increase USD earnings in the Group.

The group is also looking at add on its regional presence as soon as the environment permits.ebusinessweekly.co.zw