FMHL profit nearly doubles first quarter profitability

Diversified insurance giant, First Mutual Holdings Limited recorded a solid performance in the quarter to March 31, 2024 after almost doubling profitability despite some headwinds experienced during the period.

According to the group, after-tax profit jumped 82 percent to US$3,7 million compared to the same period in the prior year.

Consolidated Insurance Contract Revenue (ICR) amounted to US$35,5 million, which was 8 percent above the prior year.

“The positive outturn on the revenue was mainly driven by an increased uptake of US dollar insurance products by the group’s clients. As of the reporting date, pure US dollar ICR for the local business units constituted 82 percent of the total ICR compared to 34 percent in the prior year,” said the group in an update for the period.

FMHL revealed that the insurance service result grew by 3 percent to US$4,6 million from the prior year on the back of increased ICR from the group’s insurance business units.

However, the insurance service result growth was lower than ICR due to higher claims in the period that were partially offset by reinsurance recoveries.

According to the group, rental income for the quarter was US$2 million, representing a 25 percent increase on the same period in the prior year.

The growth compared to the prior year arose from the increased uptake of USD leases by tenants. A sector report by real estate firm Knight Frank Zimbabwe shows that the real estate’s ability to generate cash in US dollars has helped offset the currency and exchange rate volatility.

Landlords are largely pegging their properties in US dollars, across segments – from residential to commercial.

By the close of the quarter, pure US dollar rentals for the group totalled US$1,4 million, contributing 72 percent of total rental income, representing a 43 percent increase from prior year. Occupancy levels stood at 88,78 percent which was below the target of 89,63 percent.

Total assets increased by 3 percent to US$229,1 million from US$221,7 million in December 2023.

“The increase was driven by increases in the following lines: ZSE listed equities, insurance and reinsurance contract assets, debt securities at amortised (mostly consisting of foreign denominated bonds/money markets above 90 days),” said the group.

During the review period, Zimbabwe Stock Exchange’s (ZSE) rallied by 314 percent in the first quarter of 2024, ahead of both official and alternative market exchange rate movements. This resulted in a recovery, in real terms of previously depressed listed equity fund holdings.

The Victoria Falls Stock Exchange (VFEX) on the other hand saw a 2,5 percent increase in market capitalisation to US$1,2 billion. Liquidity has been low on the market, despite the All-Share Index gaining 2,51 percent during March 2024.

In line with the profit for the period, the group recorded a growth in shareholder equity of 3 percent to US$68,9 million.-herald