Regional business pushes First Mutual’s Gross Premium Written to $22bn

Listed insurance group, First Mutual Holdings, announced a $16,9 billion profit for its half year period ended June 30, 2022.

In inflation adjusted terms, the group’s Gross Premiums Written increased by 38 percent to $21,6 billion, with Net Premiums Earned rising by 72 percent to $18,5 billion.

The growth was attributed to organic growth on the existing portfolio and revaluation of policies in line with inflation as well as a rise in USD policies.

Fair value gains from the group’s property operation were a significant contributor to the sizeable profit growth.

It is observed that growth in income (excluding adjustments) at 32 percent was outpaced by growth in total expenditures at 59 percent, and netting the figures off returned a deficit of $6,5 billion.

Regardless, the group’s operations generated a net cash flow of $3 billion, which allowed it to internally finance its investment activities.

The rising scale of business in the group’s regional operations was highlighted as a positive, although it was not disclosed if the operations were profitable. The growth bodes well going forward, along with moderate optimism on the economic prospects of Zambia, Mozambique and Botswana.

In the domestic market, the group’s market position is relatively stable, with the short term reinsurance business benefiting from its capacity to meet the rising demand for USD policies. Given the depressed outlook for the domestic economy, and the relative maturity of the domestic insurance industry, there is significant emphasis on the success of the regional business.

Beyond financial concerns, there is some behind the scenes intrigue, with the apparent acquisition of a controlling stake in First Mutual Holdings by CBZ Holdings.

With seemingly no official communication or acknowledgement from FMH, it will be interesting to see how the two entities will combine. The CBZ Holdings chief executive, Blessing Mudavanhu, was quoted in the press saying he expects FMH to eventually be delisted and have its operations absorbed.

It will certainly be sad to see an iconic brand like First Mutual disappear, and the integration process promises to be complex considering that CBZ Holdings is also allegedly eyeing ZB as another acquisition target.

Assuming it all works out, the resultant entity will have a significant domestic and regional footprint in the insurance sector.-ebusinessweekly