Group Chief Executive’s Review of Operations
For the year ended 31 December 2023 the country registered GDP growth of 5.5%. This was achieved under volatile macroeconomic conditions, with the local currency depreciation for the greater part of the year. The increasing use of the USD dollar was a critical mitigating factor against continued local currency weakness. The premium between official and alternative market exchange rates ranged from a low of 17% to a high of slightly over 100% during the calendar year. Major policy pronouncements were made to contain macro-economic imbalances leading to a fluid economic policy environment.
On the official exchange rate market the Zimbabwe dollar (ZWL) lost 93% of its value during the review period. This led to lower confidence in the local currency. According to the Total Consumption Poverty Line ZWL inflation was 380% at December 2023 whilst the official ZWL:USD exchange rate movement was 365%. It is, however, estimated that alternative market exchange rate movements for the ZWL:USD were much steeper. The business therefore continued to invest in assets that could provide a hedge against significant local currency erosion and encouraged clients to migrate to hard currency denominated products in order to ensure that the insurance benefit met its promise in the event of a claim.
During the year the ZSE registered a nominal gain of 981.5% which is touted to have fallen slightly short of the alternative market exchange rate movement. The Victoria Falls Stock Exchange registered a loss of 28.9% owing to significant foreign selling pressure and less than ideal trading liquidity conditions for most of the year. Whilst the ZSE did well in tracking exchange rate movements and beating inflation in the first half of the year, significantly tighter liquidity conditions largely contributed to a significant slow-down in performance in the latter half of the year. On the money market front ZWL devaluation resulted in negative real local currency returns whilst activity for the USD money market picked up significantly. This was due to economic agents preferring the more stable USD for access to real returns on the part of lenders and the preference by borrowers of funds to utilise foreign currency given the increasing dollarisation of the economy.
GDP growth for Botswana was firm at 3.8%, supported by recovering diamond prices, tourism and efforts to diversify the economy which were anchored on low inflation and a stable Botswana Pula.
In Mozambique, despite lingering insurgency risk, the economy registered growth of 6% supported by initiatives such as the resumption of key energy projects.
The FMHL Group continued to exploit opportunities arising from this regional growth and stability to further grow its market share and return value to its shareholders.
OPERATIONS REVIEW
The commentary below relates to the unconsolidated performance of the various clusters and business units within the FMHL Group in both inflation adjusted and historical cost terms for the year ended 31 December 2023. All the figures are in ZWL except where another currency is indicated.
LIFE AND HEALTH CLUSTER
First Mutual Life Assurance Company (Private) Limited
Insurance contract revenue (“ICR”) for the period amounted to $71.5 billion in inflation adjusted terms, representing a growth of 102% compared to the prior year of $35.4 billion. In historical terms, the business recorded a growth of 916% against the prior year. The year-on-year growth in the ICR was driven by the regular revisions in sums assured with the objective of retaining the value of policyholder benefits. Growth in premiums from the retail segment was largely due to significant growth in USD denominated premiums on the Eternal Life Plan and e-FML Gold Funeral products. In the corporate segment growth in premiums was attributable to the increase in the Group Life Assurance (GLA) portfolio arising from new business and organic growth. The organic growth stemmed from the effect of employee salary increases, as employers converted some allowances to basic pay, the driver of GLA premiums.
The business achieved a profit for the year of $113.8 billion in inflation adjusted terms, reflecting an increase of 847% compared to the prior year and a growth of 1,236% in historical cost terms to $163.2 billion. The profit after tax growth was driven by strong operating result plus above inflation increases in premiums as noted above and net investment performance of selected assets like (investment property and unquoted equities).
First Mutual Health Company (Private) Limited
For the year ended 31 December 2023 the business achieved an ICR of $327.1 billion, representing a growth of 125% compared to the prior year in inflation adjusted terms. In historical cost terms the ICR rose by 784% to $193.9 billion. The growth mainly arose from the regular exchange rate linked reviews to premiums in response to increased medical benefit costs in order to cushion members from the negative impact of shortfalls driven by price increases effected by medical service providers. Another contributor to growth in real terms was the migration to USD medical cover by clients in a bid to maintain product relevance in a volatile health service cost market.
The business unit generated a profit after tax amounting to $40 billion in inflation adjusted terms representing a growth of 283% compared to prior year. In historical cost terms the profit after tax amounted to $53.4 billion, 1,049% higher than the prior year. The positive out-turn was purely driven by a strong operating result. Investment performance of assets held was rather mixed, with listed equities under performing while unquoted equities and USD money market instruments exceptionally outperformed inflation.
The business continues with its strategic roll-out of medical services facilities such as clinics, pharmacies, dental and optometry services as part of its long-term strategic plan. This strategic thrust is meant to complement government efforts to provide greater access to Zimbabweans to quality healthcare at affordable prices.
GENERAL INSURANCE CLUSTER
NicozDiamond Insurance Limited
The ICR grew by 133% to $325.9 billion in inflation adjusted terms and 922% to $11.8 billion in historical cost terms for the period ended 31 December 2023.The revenue increase was driven by the continued migration to USD denominated policies which became steady in the fourth quarter. Moreover, organic growth as well as the continued review of statutory covers in line with exchange rate linked reviews contributed to the revenue increase during the year.
The profit for the year ended 31 December 2023 amounted to $30.3 billion in inflation adjusted terms which represented a growth of 87% against the prior year. In historical cost terms the profit for the period rose to $52.5 billion, representing a growth of 1,075%. The positive performance was mainly driven by the notable increase in the ICR as well as growth in net fair value gains on investment properties and equity investments.
Diamond Seguros – Mozambique
The business saw growth mainly driven by continued improvements in broker business reflecting increasing market confidence. In Mozambican Metical (MZN) terms ICR grew by 37% to MZN 258.4 million compared to the prior year.
REINSURANCE CLUSTER
FMRE Property and Casualty (Proprietary) Limited – Botswana
For the period ended 31 December 2023 the ICR grew by 11% to BWP 257.4 million from BWP232.6 million in the prior year. The growth during the year was partly attributable to improved local and international treaty participation and growth of specialist lines of business under the casualty segment. The BWP fell by 4% from USD1:BWP12.9 to the USD at the beginning of the year, to USD1: BWP13.4 as at 31 December 2023, shedding close to 4% of its opening value against the USD. However, this movement in the exchange rate was lower than the growth in the ICR in both BWP and ZWL terms.
The business achieved an a profit of BWP 26 million in 2023 8.86% below prior year profitability of BWP 28.6 million.
First Mutual Reinsurance Company Limited – Zimbabwe
For the year ended 31 December 2023 the ICR grew by 164% to $75.7 billion in inflation adjusted terms and by 817% to $40.6 billion in historical cost terms. The increase in ICR was driven by significant migration to USD policies by clients, consequently leading to more business for reinsurersas there was limited USD underwriting capacity at local direct insurers.
The business achieved an inflation adjusted profit for the period of $24 billion, 1,075% above the prior period profit. In historical cost terms the profit for the period amounted to $34.8 billion representing a growth of 3,241%. The growth in profit was mainly a result of the rise in ICR which grew more than the growth in expenses as well as increases in exchange gains due to the significant foreign denominated balances held.
INVESTMENTS CLUSTER
First Mutual Properties Limited
Rental income for the year ended 31 December 2023 grew by 192% to $39.7 billion in inflation adjusted terms and 1,100% to $24.5 billion in historical cost terms. The growth compared to prior year was mainly driven by the continued migration to USD denominated leases by the majority of the tenants both in residential and commercial property space, with those leases maintained in the local currency being regularly adjusted for inflation. Revenues were also positively impacted by the occupancy rate to 88.07 % in 2023 compared to 85.52% in 2022. Independent investment property valuations as at 31 December 2023 resulted in net fair value gains of $542.1 billion.
The business recorded a total profit after tax of $553.9 billion in inflation adjusted terms and $919.1 billion in historical cost terms, representing an increase of 265% and 1,055% respectively compared to the prior year.
First Mutual Microfinance (Private) Limited
The gross interest and fee income for the year ended 31 December 2023 grew by 432% to $20.3 billion in inflation adjusted terms and 2,169% to $12.8 billion in historical cost terms. The growth was primarily due to increases in the USD loan book which consisted 90% of the total loan book as at 31 December 2023. The corresponding finance costs amounted to $6.6 billion in inflation adjusted terms, 408% above prior year and $4.3 billion in historical costs terms which represented an increase of 2,197%. The business turned a corner and attained critical mass leading to an inaugural profit for the year ended 31 December 2023 of $3.2 billion, 363% above the prior year in inflation adjusted terms and 2,439% growth to $4.1 billion in historical cost terms.
First Mutual Wealth Management (Private) Limited
During the year the business recorded investment management fees of $4.6 billion which were 126% above the prior year in inflation adjusted terms and 920% growth to $2.7 billion in historical cost terms. This increase was mainly driven by the rise in the funds under management especially in foreign currency denominated assets. Funds under management for the period ended 31 December 2023 grew by 543% to $545.1 billion partly as a result of increased support from third party contributions, growth on the ZSE and net fair value gains on investment property.
HUMAN CAPITAL
Consistent with the Group’s operations and strategy, which is the provision of financial and investment services that are financially inclusive, we consider employees to be a key success factor in navigating a volatile and complex operating environment. Amidst these challenges, our employees have demonstrated commitment and resilience to serve our clients and other stakeholders including the implementation of our consensus driven strategy. We will ensure a continued investment in human capital retention and development programs and its prioritisation on a Group-wide scale in order to improve the skills of our staff and align them towards future requirements.
APPRECIATION
On behalf of First Mutual I would like to thank all our stakeholders for their continued support and trust in the Group. We will continue to be a reliable partner and remain focused on our clients as we strive to exceed your expectations.
Douglas Hoto
Group Chief Executive Officer
5 June 2025
