Insurance group, Fidelity Life Assurance Zimbabwe’s revenues for the nine months to September 30, 2019, surged 154 percent to $45 million compared to the same period in the prior year, despite a challenging business environment characterised by inflationary pressures.
Although the business environment was tough, the Malawi business and balance sheet growth in Fidelity Life Assurance of Zimbabwe continued to be key drivers of the group’s revenue performance.
The period under review was characterised by economic challenges as foreign currency shortages persisted, which resulted in an increase of over 100 percent in the official exchange rates.
During the period under review, several monetary reforms were put in place to tame inflation, restore confidence in the economy and ensure easy availability of foreign currency on the official interbank market, but failed to bear the desired results.
Erratic utilities supplies across the country further worsened business woes while the skyrocketing prices of goods and services resulted in a depletion of disposable incomes.
“The financial services industry has not been spared from these crippling conditions. However, the group has remained steady despite these conditions,” said Fidelity in a trading update.
Indications are that total revenue performance for the period was boosted by net investment income, resulting in a 262 percent growth in total revenues to $129 million compared to $35 million in the comparative period.
“This continues the trend reflected in the results to 30 June 2019,” said Fidelity.
According to the insurance giant, all companies in the group recorded above 50 percent growth on the topline.
During the period under review, profit before tax jumped 276 percent to $14,8 million from $3,9 million achieved in the same period in the prior year despite total
expenses continuing to be weighed down by re-estimation of project completion costs for Southview water works given weakening of the local currency.
However, Fidelity said the increase in this provision was to some extent offset by increases in value of assets held to hedge this risk, thus enabling the group to still record growth in profits.
Despite the difficult business environment, Fidelity remains upbeat of maintaining a good performance for the rest of the year and in the next financial year on the back of survival strategies put in place to navigate a difficult environment.
Said Fidelity: “2020 increasingly looks to be another difficult year.
However, the organisation will move to adapt and implement strategic initiatives to create and protect value for our key
stakeholders; clients, shareholders and our employees.
“The Group, however, expects to maintain the stable performance recorded so far through to the end of the current year.”