Fidelity targets doubled profits

Premium income was US$11,76 million compared to US$7,7 million in 2010, an increase of 53%. Benefits, claims and expenses went up 45% to US$8, 4 million, resulting in a pretax profit of US$9,4 million. The group reported earnings of 1.86c a share and declared a dividend of 0.32c a share.

Managing director Simon Chapereka told analysts that performance was expected to continue to improve and the group would look at bringing relevant products to the market.

Chapereka said negotiations were at an advanced stage for the purchase of 300 hectares in Harare, which is expected to yield 6 000 stands. The project is expected to come on board at the end of this year or early next year.

The group has so far sold 129 stands out of the provision of 200 stands for the Fidelity Life Park near Mabvuku. The first phase of the project has 34 hectares, which yielded 317 stands but 117 are being kept in a land bank.

Chapereka said the group would embark on phase two this year using the remaining 33 hectares of the land.

The group has in the past said that as a long term player it needs to have exposure in property, equity and money markets, with a portfolio mix that takes advantage of opportunities which arise in these sectors.

Last year, Fidelity was the top performer on the ZSE with a gain of more than 600%.  Chapereka said there was still room for growth in the counter.

In terms of its core business the group now had 80 pension funds under its management. The group was still recovering from legacy issues in the life and pensions industry stemming from the hyperinflation era. From a high of 350 before dollarisation, pension funds under Fidelity’s management started creeping up at dollarisation from 29 in 2009 to 62 in 2010  and to 80 currently.

The group now had 20 000 life policies and 20 000 funeral policies while it was expecting further roll out branches of its micro-finance service. 
Fidelity Life Assurance premium income was US$7,1 million, coming mainly from employee benefits, which brought in US$6,1 million. Individual life premiums accounted for the remainder.

Malawi subsidiary Vanguard Life Assurance had made a pre-tax profit of US$1,65 million in spite of the economic situation in Malawi, as the group had benefitted from the Pensions legislation in the country, which made contributions towards retirement benefits compulsory. Chapereka said the group was in the process of raising MK350 000  (US$166 398 at the official exchange rate) for the unit through a private placement, which will reduce its shareholding to 51%.

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