Zimbabwe: Aggressive Premium Reviews Boost Fidelity’s Financials


According to FIDELITY Life Assurance (FLA), investments in new markets and expansion of distribution channels resulted in new business, including USD-denominated policies, which culminated in improved revenues.

The company’s financial data for the half year ended Jan.

Reuben Java, CEO of the outgoing group, said the company’s strong performance was the direct result of aggressive premium reviews conducted to ensure reasonable value retention in relation to policyholders.

“A conscious choice of markets and the expansion of distribution channels resulted in the acquisition of new business, including USD-denominated policies, and this contributed to improved sales growth in addition to the organic growth of the existing portfolio due to product innovations that required higher premiums.” he said in a financial statement.

He said the group will continue to innovate and develop financial solutions for clients that adapt to their changing needs and circumstances.

“The group will accomplish this through asset preservation efforts that include real growth investment strategy, careful selection of USD-producing markets and diversification into the SADC region,” said Java.

During the reporting period, the company’s total spend increased 90 percent from $ 62.7 million in 2020 to $ 101.7 million this year.

Mr Java said the claims and benefit payments, which make up the direct cost, have increased 127 percent, and the company prides itself on ensuring timely settlement of all policyholder claims as it recognizes this as its core business.

“Administrative costs increased 35 percent, which was relatively low compared to inflation and revenue growth, and this shows the commitment and discipline of management to tightly contain controllable spending and improved efficiency in the value chain through the use of digital technologies,” he said .

The company ended the period with inflation-adjusted operating profit of $ 49.8 million, 285 percent higher than last year’s operating profit of $ 12.9 million.

The group’s Malawi business, Vanguard Life Assurance Company Limited, rose to $ 296 million from $ 39.3 million in the same period last year, with 62 percent contributing to the group’s core insurance sales.

“The growth in core revenue was driven by significant new business acquisitions, an upward revision of insurance policies and new product launches,” noted Mr. Java.

He said claims and benefit payments, which make up the direct cost, rose 773 percent and the growth was largely due to claims related to Covid-19, mainly due to cuts and increased payout benefits.

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“Administrative costs have increased 154 percent and management will continuously review spending and implement cost reduction strategies.”

Net interest income for the group’s financial services entity, Fidelity Life Financial Services, increased from $ 26 million the previous year to $ 32 million for the period ended June 30, 2021, and the subsidiary contributed seven percent to the group’s total core revenue.

“The growth in 2020 is largely due to strong shareholder support for diversified credit lines during the period, and that aggressive growth is due to the quality of the loan book, which has continued to improve,” said Java.

Mr. Java indicated that the company will continue to develop new life insurance products to meet the ever-changing needs of customers.

“With a growing informal sector in Zimbabwe and Malawi, we develop pension, funeral and life insurance products for SMEs and customers with seasonal incomes. 19 hospitalization expenses, “he said.

Mr Java said the group’s Fidelity Life Bureau de Change is now fully operational, offering customers USD at the official exchange rate.

He said the Bureau de Change has actively participated in the RBZ foreign currency allocation system for the market and customers are benefiting from this opportunity to apply for USD for overseas fee payments, DSTV and business travel.

“There are other exciting products in the pipeline for our life insurance business that cover the individual life, funeral and annuity business. These will be on the market before the end of the year, ”he said.

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