Financial Commentary

The Group gained control and started consolidating the investment in Diamond Companhia de Seguros (“Diamond Seguros”), a direct insurance company domiciled in Mozambique, as at 1 December 2020 after completion of the capitalisation exercise.

Inflation adjusted revenue analysis

Net premium earned (“NPE”) at $1.6 billion was 60% above prior year in inflation adjusted terms due to organic growth and above inflation rate revisions of sums insured to align with the exchange rate, particularly for the short-term insurance policies.

Investment property maintained the United States of America Dollar (“USD”) value determined as at 31 December 2020 and converted to Zimbabwe Dollar (“ZWL”) at the prevailing rate, however, the ZWL depreciated by 3% against inflation movement of 12%, hence fair value loss of $816 million for the three months to 31 March 2021.

Total income was 7% higher than the prior year reflecting positive returns on listed equity investments, despite fair value losses on investment property.

Historical financial performance analysis

Net premium earned at $1.6 billion was 514% higher than prior year and average year-on-year inflation rate of 308%. The increase was primarily due to organic growth, an upward review of sums insured, as well as a weakening of the Zimbabwe dollar (“ZWL”) against the USD.

Rental income increased by 414% from prior year largely due to quarterly rental reviews made during 2020 coupled with improvements in the occupancy rates from 86.85% in 2020 to 88.93%.

Administration expenses increased by 710% partly as a result of inflation and also in line with exchange rate movements for foreign currency denominated expenses.

The total assets increase of 11% mainly attributable to fair value gains on equity investments and the revaluation of foreign currency denominated assets. The growth was in line with the consumer price index (“CPI”) movement of 12% from December 2020 to March 2021.

Impact of Coronavirus pandemic

To date, the Group has not been significantly negatively impacted by the pandemic with outturns in line with plan. We will continue to monitor the situation and maintain precautionary measures against the spread pandemic.

Announcement by NSSA to reduce FMHL shareholding

Further to the cautionary statements released, shareholders are advised that the National Social Security Authority (“NSSA”) announced its intention to reduce its stake in First Mutual Holdings Limited (“FMHL”) from the current 66.22% to 35% through offloading up to 31.22% to a strategic partner. This move will see NSSA complying with regulatory requirements, while bringing in a strategic investor with solid financial resources, synergistic, technical and strategic benefits to enhance the growth prospects of the First Mutual Group. NSSA will remain as the single largest shareholder. These new developments may have a material effect on the price of the Company’s securities. Accordingly, shareholders are advised to exercise caution when dealing in the company’s securities until a full announcement is made.

Download full Trading Update

FMHL Trading Update to 31 March 2021.pdf

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Directors: A R T Manzai (Chairman), D Hoto* (Group Chief Executive Officer), W M Marere* (Group Finance Director) G Baines, F Mabena, M Mangoma, A Masiiwa, E Mkondo, E K Moyo, M Mukondomi, S V Rushwaya (* Executive Director)
FIRST MUTUAL HOLDINGS LIMITED, First Mutual Park, 100 Borrowdale Road, Borrowdale, Harare, Zimbabwe | P O Box BW 178, Borrowdale, Harare | Tel: +263 (242) 886 000 – 17 | E-mail: [email protected] | Website: www.firstmutual.co.zw