Fidelity Life strategy defies Covid-19
FIDELITY Life Assurance said knock-on effects of repeated national lockdowns on the economy cascaded down to adversely affect corporates and individuals at all levels and their business inevitably experienced reduced economic activity at all levels.
The company said it was pleasing to note that despite the turbulence, the core revenue lines registered strong growth over the year which leaves them in a good position to regain ground going forward.
Fidelity Life Assurance chairman Livingstone Gwata said, “On strategy execution, we had several successes on key milestones in the year under review. We launched a fully-fledged contact centre; we witnessed the creation and launch of an online Micro lending on-boarding platform.
“Our Life and Pensions business launched new products such as Vaka Yako and Covid19 cover under the Employee Benefits business.”
On the customer service front, the assurance company opened a new service centre in Beitbridge for its Funeral Services business and FLIMAS managed to get their members vaccinated against Covid-19.
“We made significant progress in achieving our objectives anchored on the 3 pillars of Growth (Cash), Positioning (Customer) and Transformation (Change). The year also saw the Group reaching yet another major milestone as we saw the final completion of the Southview offsite works,” the company said in a statement.
Fidelity also released its financials and the insurer realised a profit after tax of $274.9 million on an inflation adjusted basis for the year ended December 31, 2021 representing a strong growth from a loss position of $65.8 million posted in the prior year.
Group total revenue in inflation adjusted terms increased by 90 percent from $1,74 billion recorded in the prior year to $3,3 billion recorded in the current year. According to the company, revenue was driven by investment income and net premium written which increased by 99 percent and 75 percent respectively.
Investment income increased from $866.0 million to $1,7 billion and net premium written increased from $611.8 million to $1,1 billion.
On net premium written, Gwata said, “The growth in net premium written was driven by aggressive premium reviews and strong organic growth of the life book as well as significant inflows from new products launched which were supported by market diversification and enhancement of the distribution channels.”
In the period under review, Fidelity Life’s investment income was mainly driven by fair value gains on investment properties and equities.
Inflation adjusted expenses in the period under review increased by 66 percent from $1,8 billion recorded in the prior year to $2,9 billion in the current year.
The chairman said, “The increase in the company’s total expenses was driven by net benefits and claims, changes in insurance contract liabilities and operating expenses which grew by 172 percent, 97 percent and 75 percent respectively.”
Operating expenses were mainly driven by the increase in the rate of inflation and the exchange rate movements whilst net benefits and claims were driven by high Covid 19 related claims resulting from retrenchments and death claims.
Fidelity applauded its foreign subsidiary in Malawi as it continues to provide a good hedge to the insurer against the currency volatility effects currently being experienced.
The company did not declare a dividend as it seeks to consolidate its asset position
“In view of the need to preserve internal resources to strengthen the capital position of the company through the deployment of earnings to increase business underwriting capacity, the Board resolved not to recommend the declaration of a dividend,” Gwata said.