Aggressive Premium Reviews Boost Fidelity's Financials

FIDELITY Life Assurance (FLA) says investments into new markets and the expansion of distribution channels resulted in writing new business including USD denominated policies which culminated in improved revenues.

The company's financials for the half year to June 30, 2021, shows that gross premium written grew 118 percent to $184 million in inflation adjusted terms from $84 million during the same period prior year, contributing 38 percent to core insurance revenue of the group.

Reuben Java, the outgoing group's chief executive, said the company's strong performance was a direct result of aggressive premium reviews which were effected to ensure there was commensurate preservation of value in respect of the policyholders.

"A deliberate choice of markets and expansion of distribution channels resulted in the writing of new business including USD denominated policies and this contributed to improved topline growth in addition to organic growth of the existing book as a result of product innovations which commanded higher premiums," he said in a statement of the financials.

He said the group will continue to be innovative, developing financial solutions for customers to align with their changing needs and circumstances.

"The Group will achieve this through asset preservation efforts that include adopting an investment strategy focusing on real growth, a scrupulous selection of USD generating markets and diversifying into the SADC region," Mr Java said.

During the period under review, total expenses of the company increased by 90 percent from $62,7 million in 2020 to $101,7 million in the current year.

Mr Java said claims and benefit payments which make up direct costs grew by 127 percent and the company takes pride in settling all the policyholder claims on time as it recognizes that to be its core business.

"Management expenses grew by 35 percent which was relatively low compared to inflation and growth in revenue and this shows management's commitment and discipline to tightly rein in controllable expenses and improved efficiencies in the value chain aided by leveraging on digital technologies," he said.

The Company closed the period under review with inflation adjusted operating profit of $49,8 million which is 285 percent above prior year operating profit of $12,9 million.

The group's Malawi business, Vanguard Life Assurance Company Limited's total core revenue increased to $296 million from $39,3 million in the prior period with a 62 percent contribution to core insurance revenue of the Group.

"The growth in core revenue was attributable to significant new business acquisition, upward revision of sums assured and introduction of new products," noted Mr Java.

He said claims and benefit payments which make up direct costs grew by 773 percent and the growth was largely driven by Covid-19 related claims, mainly retrenchments and increased withdrawal benefits.

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"Management expenses grew by 154 percent and management will continuously review expenses and implement cost reduction strategies."

The group's financial services unit, Fidelity Life Financial Services net interest income increased from $26 million in prior year to $32 million for the period ended 30 June 2021 and the subsidiary contributed seven percent to total core revenue of the group.

"The growth over 2020 is mainly attributable to firm shareholder support towards diversified lines of credit during the period and this aggressive growth is anchored on the quality of the loan book that continued to improve," Mr Java said.

Mr Java indicated that the company will continue to develop new Life Assurance products in order to meet customers' ever changing needs.

"With a growing informal sector in both Zimbabwe and Malawi, we are developing pension, funeral and life assurance products for SMEs and clients with seasonal income. We have also added a Covid-19 rider to the Group Life Assurance products, which covers Covid-19 related 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 been actively participating in the RBZ foreign currency allocation system to the market and customers are benefiting from this facility to apply for USD to pay for such things as foreign fees, DSTV and business travel.

"There are more exciting products in the pipeline for our life business that cover individual life, funeral and pensions businesses. These will be introduced to the market before the end of the year," he said.