Fidelity Life terminates restructuring plans

Zimbabwe Stock Exchange-listed insurance concern, Fidelity Life Assurance Zimbabwe has cancelled plans to raise new capital.

The development comes on the heels of last week’s announcement by Zimre Holdings Limited (ZHL) that it had entered into an agreement with the National Social Security Authority (NSSA) for the purchase of its 35,09 percent stake in Fidelity Life.

ZHL already holds 20,57 percent of the life insurer and the acquisition will see it become the majority shareholder in the company with a 55,66 percent stake.

The Fidelity Life acquisition shares constitute 4,25 percent of the ZHL total issued ordinary shares.

The share acquisition, which is subject to shareholder approval, will result in Fidelity becoming a subsidiary of Zimre and its operations being consolidated in the financial statements of the group.

The cancelled transaction, which Fidelity initially announced in July last year, would have involved the restructuring of the group’s capital structure through the issuance of shares by way of a rights offer.

This means the new parent company is likely to inject new capital into the struggling company.

“The directors of Fidelity Life Assurance of Zimbabwe wish to advise all shareholders and the investing public that the company is no longer undertaking the rights offer as indicated in the previously published cautionary statements,” said company secretary Chipo Matongo in a new cautionary.

“As such the company withdraws its cautionary statement.”

Fidelity operates three insurance businesses, Fidelity Life Assurance, Vanguard Life Assurance and Fidelity Funeral Services.

It has several other subsidiaries involved in the provision of micro-lending, medical aid, asset management and actuarial services.

It is involved in property development. Fidelity Life Assurance has been struggling for capitalisation as it reels under the strain of huge operating costs.

The company’s capital is made up of $22 million in equity while the balance of $231 million is in liabilities.

Fidelity Life Assurance had a positive run last year, posting a 154 percent growth in revenue in the third quarter, which closed at $45 million, from $18 million in the prior comparable period.

Group revenue performance was boosted by net investment income, which resulted in a 262 percent growth in total revenues, which closed at $129 million from $35 million prior year comparable.-ebusinessweekly