New Zimbabwe.com

FML assets separation forensic audit reaches a crescendo

Spread This News

By Alois Vinga


HARARE: A forensic audit into the questionable asset separation by First Mutual Life (FML) has reached a crescendo, with the government moving swiftly to appoint investigators into the matter.

FML allegedly defied the law on separation of insurance and pension businesses.

The firm is alleged to have submitted an unsatisfactory report during an assets separation exercise.

It is the second-largest life assurance company in Zimbabwe by market share, specialising in retirement, medical insurance, micro-insurance and other long-term financial security products.

In an update this week, FML chairman Amos Manzai, said investigations had formally kicked off.

“The regulator issued a letter dated 27 July 2022 advising that the Finance Ministry had appointed BDO Chartered Accountants Zimbabwe, as the forensic investigator in line with the provisions of the Insurance Act (Chapter 24:07),” he said.

“The letter further noted that the investigation was expected to be completed within four months from the commencement date. The investigation formally commenced on 26 August 2022.”

As a result the audit review of the group financial statements is incomplete pending the finalization of the forensic investigation of FML.

“In the interim, the board of directors, in consultation with the ZSE, has decided to publish the financial information in the form of a preliminary report,” Manzai said.

Meanwhile, during the review period, FML recorded significant growth in US$ denominated short term insurance cover amid plans to invest in technology in a bid to improve service delivery.

For the period ended June 30, 2022, group chief executive officer Douglas Hoto said there was a marked shift towards foreign currency denominated policies.

“There was a visible shift towards US$ insurance cover amongst the short-term insurance businesses and similarly, there was an increase in the demand for US$ investment products and loans for the asset management and microfinance businesses respectively,” he said.

At Nicoz Diamond Insurance Limited , Gross Premiums Written  grew by 27% to $6 billion in inflation adjusted terms and by 195% to $4 billion in historical cost terms attributed  to organic growth as well as an increased preference for US$ denominated policies.

The Group’s total assets appreciated in value by 44% from 31 December 2021 to 30 June 2022 in inflation adjusted terms and 215% in historical cost terms.

The growth in both inflation adjusted and historical cost terms is mainly attributable to the fair value adjustment on investment properties, listed equities and an increase in cash reserves which went up by 33% in inflation adjusted terms and 192% in historical cost terms to $9 billion.