First Mutual records $17.6 billion profit 

30 May, 2023 - 12:05 0 Views
First Mutual records $17.6 billion profit 

The Sunday News

Judith Phiri, Business Reporter  

First Mutual Holdings Limited has said the group achieved a profit of $17.6 billion which represented a 616 percent increase during the first quarter of 2023.

The profit growth was attributable to the increases in insurance contract revenue, rental income, net fair value gains in investment properties as well as net investment return due to some recovery in their listed equity portfolio.

In a trading update for the first quarter ended 31 March 2023, the group said insurance contract revenue, insurance service result, rental income and net investment return all grew.

“During the period under review, insurance contract revenue at $25.9 billion grew by 497 percent compared to the same period in prior year. The growth was driven by the continued revaluation of insurance policy values to match inflation and exchange rate movements to ensure adequate cover for clients as well as a migration of more policies to the United States Dollar (USD) for value restoration in case of the occurrence of an insured event,” read part of the update.

“The proportion of the USD business being written by the group, constituted 53 percent of the total insurance contract revenue at US$14.7 million compared to 54 percent in the same period last year.”

First Mutual Holdings said the insurance service result grew by 446 percent to $3.8 billion compared to the prior period, while the growth was a result of increases in the insurance contract revenue as well as improved retention of the same as demonstrated by growth of the net reinsurance revenue.

In terms of rental income and net investment return, the group said rental income grew by 584 percent to $1.4 billion.

“The growth arose from a combination of factors which included a higher proportion of USD denominated leases as well as inflation driven on ZWL rental rate increases.

“The occupancy levels stood at 84.55 percent compared to prior year of 89.99 percent and the average rental/square metre was US$4.73 compared to prior year of US$4.61. The overall Group net investment returns amounted to $7.9 billion, 159 percent above prior year. The growth was driven by recoveries on the ZSE,” said First Mutual Holdings.

It said despite the volatile operating environment, the group attained higher business levels in the core insurance units as well as increased revenue in the investment property and micro-lending units.

While, the migration from local currency to the USD transactions continued in the period under review for all local subsidiaries particularly for the general insurance and reinsurance businesses due to the volatility of the Zimbabwe dollar.

First Mutual Holdings said the group will strive to continue to provide a compelling value proposition to clients by maintaining the relevance in its products and delivering on its promise thus achieving sustainable operations.

“We will also pursue value-enhancing initiatives such as investments in real assets in order to preserve and grow the balance sheet in the current hyperinflationary environment.”

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