Fidelity PAT down 66% on rising claims

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FIDELITY Life Assurance of Zimbabwe Limited posted a profit after tax of $985 253 for the half-year ended June 30, 2016 compared to $2,9 million recorded same period last year on the back of an increase in net claims and benefits.

BY VICTORIA MTOMBA

Net claims and benefits more than doubled to $2 458 273 during the period under review from $894 822 in the comparable period last year.
Gross premium income of $8,7m was 4% below prior year.

The group posted a profit from operations of $2,1m in the period under review, compared to $3,3m achieved in 2015.

“This level of performance which represents a decline of 35% was due to an industry wide claims surge attributable to massive retrenchments and other economic challenges bedeviling the economy. In all, there was a 171% rise in claims and benefit payments in the period under review,” board chairman Fungai Ruwende said in a statement accompanying the group’s financial results.

Revenue for the group went down to $8,7m from $9,1m in June 2015.

The group expects the year to remain challenging and remain focused on cost control, business acquisition and retention of existing customers.

During the period under review, total comprehensive income closed at $1,4m, down from $1,8m same period last year.

The bottom line was weighed down by finance costs emanating from long-term debts assumed in the third quarter of 2015 to finance Langford Estates project development of, which will commence soon.

“The servicing of residential stands for Fidelity Park South View project is expected to be completed by the end of the year 2016.The successor project, Langford Estates, is expected to yield a minimum of 11 000 residential stands,” the group said.

Development process is expected to commence in the last quarter of the year.

“Property projects remain attractive to the company as they give the business, particularly insurance, matching long-term assets,” Ruwende said.

The group’s Malawi-based subsidiary Vanguard Life Assurance posted a premium income of $1,1m, compared to $1,6m in June 2015, due to the worsening economic environment in the country that has seen a low uptake of insurance products. – Newsday

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