Fidelity Life Assurance (Fidelity)’s growth hinges on the success of its Southview Park high density residential stands project and a micro-banking unit which it is keen to set up, MD Simon Chapereka said.
At an analysts’ briefing on the group’s full year financial results to December 2012, Chapereka said the Southview Park project, which had potential to generate US$60 million revenue, was key to the group’s future expansion.
“We have laid a firm foundation for expansion and we feel the Southview Park project will be able to fund group expansion going forward,” he said.
Chapereka said progress on the project was presently slow as the company awaited a site plan approval from the City Council allowing the change of land use from the initially approved low density residential to high density residential.
He said high density property development had higher return on investment than low density.
He added the company had sold 425 stands from deposits and a few for cash out of the 5950 stands averaging 240 square metres and US$9250 per stand.
The project requires US$20 million for development, US$10 million of which had already been secured.
So far, US$1,5 million from deposits and monthly downpayments had been banked since late 2012 when Fidelity started selling the Southview Park stands.
Chapereka said the company had received 21 000 inquiries. Most of the inquiries, especially from cooperatives and corporates, are said to be awaiting visible signs of development in the area before they make purchase.
Fidelity is yet to complete the sale of its residential stands in Fidelity Life Park in Manresa, which average US$10 000-US$17 000 per stand.
The group will convert the stands into a land bank that will be disposed of for cash when the need arises.
On establishment of a micro-banking unit, Chapereka said the company was amending its proposal to meet Reserve Bank of Zimbabwe requirements.
He said the company abandoned initial plans to partner existing financial institutions in light of viability challenges, as most of them have problems with their cost structures.
The group plans to establish a micro-banking unit which accepts deposits as a means to improve its liquidity.
Currently, the group has a micro-finance arm which only contributes 3% of group profits.
FD German Mushoma said despite macro-economic challenges, the Fidelity group performed well, with total revenue growing 43% to US$27,2 million, from US$18,9 million in 2011. Gross written premiums went up 21% to US$14,4million from US$11,9 million last year.
Profit for the year was US$4,1million, 91% up from US$2,1 million recorded in the prior year.
On individual company performance, Fidelity Life Assurance, the flagship of the group, recorded a 21% growth in premium income to US$8,7million, while revenue went up 780% to US$17,8 million. Profit for the period was US$3 million, 197% up on prior year.
Vanguard Life Assurance, based in Malawi, recorded a profit slump to US$0,6 million, compared to US$1,65 million in 2011, mainly due to devaluation of the Malawian Kwacha.
Fidelity Funeral Assurance registered premium income growth of 47% to US$2,5 million, from US$1,7million prior year as the company continues its aggressive marketing strategy to increase visibility.