HomeBusiness DigestFidelity faces US$49 000 breach of contract suit

Fidelity faces US$49 000 breach of contract suit

Eric Chiriga

FIDELITY Life Assurance of Zimbabwe Ltd (Fidelity) is being sued for US$49 000 (about $490 million using the forex auction rate) by a computer software firm.

“Verdana, Arial, Helvetica, sans-serif”>The software supplier, a South African company, is suing Fidelity for breach of contract.

“Fidelity is a defendant in a court case where it is being sued for breach of contract. The potential loss to the group is US$49 000,” Solomon Tembo, the chairman of Fidelity, said at the company’s annual general meeting of shareholders two weeks ago.

Tembo refused to disclose the name of the software supplier saying he would only do so to shareholders.

“Is that newsworthy and are you a shareholder? Who is more important, the shareholders or your readers?” he asked.

“I will only disclose the name to shareholders of Fidelity,” he said. In 1996 Fidelity contracted the South African company to provide life assurance business software but it failed to deliver.

“We cancelled the contract because the supplier failed to perform. The case became a legal issue,” Tembo said.

However, Tembo said since the legal period for going to court had lapsed, it was most likely the case would be dropped.

“No provision has been made in the financial statements as the group’s management is of the view that the chances that the supplier will win the case are remote,” he said.

Tembo said the computerisation project for the individual life and group pensions, estimated to cost about $3,2 billion, was progressing well.

Fidelity’s principal subsidiaries are Zimbabwe Acturial Consultancy, Vanguard Life Assurance (Vanguard) and Fidelity Life Asset Management (FLAM).

Fidelity’s underwriting surplus grew by 710% from $1,65 billion in 2003 to about $13,3 billion last year.

The group recorded an after-tax surplus of $45,462 billion for the year ended December 31 – an 86% growth from the previous year.

Management fees from Kenya National Assurance Company contributed $1,2 billion to the results.

“Vanguard made a deficit of $35 million mainly due to lower business written and poor investment returns,” Tembo said.

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