FIDELITY Life Assurance of Zimbabwe is taking a prudent approach to navigate economic uncertainty, prioritising careful financial management and strategic investments in timeless products, according to group chairperson Livingstone Gwata.
Gwata outlined Fidelity’s focus on preserving its cash reserves while making targeted investments to ensure long-term sustainability and growth in the company’s 2023 annual report.
He said the global space was likely to remain characterised by the two major ongoing conflicts, the Russia-Ukraine and Israel-Palestine wars.
These current epicentres of geopolitical tensions, he said, have the potential to cause far-reaching adverse effects in terms of food shortages, supply chain disruptions and rise in global petroleum product prices, which, in turn, can cause an increase in production costs and cause volatility in international markets globally.
“Given the above, the business remains on high alert to these activities and will continue to monitor and carefully adapt to these changing circumstances to deliver value to its key stakeholders,” Gwata said.
“The business will be preserving its cash wallet through responsible spending and targeted investment into products that survive the test of time. Innovation will be key in also driving the products that create and preserve shareholder and policyholder value.”
Locally, the Zimbabwean economy continues to grapple with a depreciating local currency. It is expected that the multi-currency regime will be maintained as most of transactions in the private sector are being conducted in the United States dollars, he said.
Gwata said the government remained committed to the attainment of the vision 2030 goals through various projects, which include infrastructure projects in road and dam construction and rehabilitation, as well as irrigation projects.
- Fidelity moves to preserve cash reserves
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“This is commendable given aggregate demand created in the value chain and beneficiation in the steel and chrome mining sector,” he said.
In the period under review, inflation-adjusted insurance contract revenue recorded a strong growth of 242% to ZWL$116,6 billion compared to prior year, on the back of the group’s innovative product development and increased uptake of its products offering on the market.
Significant growth in premium inflows was witnessed through the Vaka Yako product contributing 83% of the individual life premiums.
The Zimbabwe operation contributed 62% of the premium inflows while 38% was attributable to the Malawi operation.
Insurance service results increased by 280% on an inflation-adjusted basis underpinned by real growth in insurance contract revenue.
“This is despite an increase in insurance service expenses propelled by the increase in claims and directly attributable costs due to the inflationary environment prevailing in Zimbabwe and the regional business operation,” he said.
Net investment income grew by 91% to ZWL$70,8 billion on an inflation-adjusted basis. The major drivers being fair value gains from investment property, equities and interest income from money market investments.
The group profit for the period increased by 9 945% on an inflation-adjusted basis to ZWL$101,1 billion. The positive profit growth was driven by the increase in insurance contract revenue and investment income.
