By Alois Vinga
GOVERNMENT’s move to scrap the ten year-old multi-currency system and designation of the Zimbabwean Dollar as sole legal tender will force Fidelity Life Assurance (FLA) to discontinue insurance products that it was selling in foreign currency.
FLA board chairman Fungai Ruwende told NewZimbabwe.com Business Wednesday that the company will also pull out of the residential property development market.
“While it is quite early to tell how the new currency is going to work, in terms of Fidelity Life Assurance the immediate impact is very huge.
“We have been offering US$ loans, health and funeral schemes among other products and due to the new developments we cannot sell those anymore and such revenue was very important to underpin our financial results and balance sheets,” Ruwende said.
Ruwende was speaking on the sidelines of the company’s annual general meeting in Harare.
The FLA chairman added that depressed salaries and foreign currency shortages have also prompted the insurer to pull out of residential properties investments.
“In part we have been forced out by the general economic conditions in the country as you know prices have gone up but salaries remain the same. So if we develop residential stands we are not going to get buyers,” Ruwende said.
FLA trading update for the first five months of 2019 shows that total revenue registered a strong growth of 88% to $25.4 million for the five months to 31 May 2019, up from $13.5 million as at 31 May 2018.
Gross Premium Income recorded strong growth of 176% and this was largely driven by 638% growth from the Malawi subsidiary while the gross premium as a proportion of total revenue is about 80%.
However, income from residential stand sales decreased to $0.1 million as at 31 May 2019 from $1.3 million 2018. Other income from residential stands decreased by 54% from $2.6 million to $1.2 million.