FIDELITY Life Assurance, buoyed by the runaway success of its housing projects in Harare South, is now angling to increase its land bank for business and office stands as management feels this will better align its long-term earnings with its life assurance priorities.
Servicing of stands at Southview Park is 84 percent complete, while works at Langford Estates — expected to deliver more than 11 000 residential stands — is about to begin.
It is hoped the development of office stands will better suit its life assurance business.
FLA managing director Mr Simon Chapereka told The Sunday Mail Business that, “We are very happy to share our success stories with the clients we registered at Manresa, Southview and now Langford estates, but now is the time to increase our land banks for the business stands as they will generate us incessant cash flows through leasing in many years to come.
“We are planning to move more and more into business stands as they sustain our (life assurance) business for a long period of time, whereas, with the residential housing projects, high profits are realised at a shorter period of time (10 years),” said Mr Chapereka.
An estimated US$7 million is expected from Manresa Fidelity Park, while Southview Park and Langford are forecast to generate US$100 million and US$300 million respectively.
“The Langford project is going to generate a bottom line of more than US$200 million, which will strengthen our balance sheet and we should be able to underwrite and under take more risk on the insurance side.
“In terms of our balance sheet, it is increasing sharply, by the time we finish the Langford project, the balance sheet will be in the region of US$500 million and on that we can underwrite even bigger insurance risks.
“Our property investments are profitable but we are not abandoning our business, which is insurance but the developments give us the ability to match our long-term liabilities and assets.
“In any case, there are not so many investment avenues outside property hence it is worth noting that we have been able to undertake these projects because of the income from the insurance side of the business,” he said.
In particular, the Langford Estate project could have a 250 percent return on investment.
The diversified insurance firm recently reported that total income for the year ended December 31, 2015 rose 36 percent to US$52,1 million from a year ago.
Revenues from the sale of stands climbed 51 percent to US$27,5 percent after an increase in the price of stands from US$9 250 to US$14 400.
Its profit grew three percent to US$5,2 million from US$5 million in the same period a year earlier. – The Sunday Mail