Zimpapers Logo

Business Editor
A DROP in rental income and investment losses eroded First Mutual Holdings Limited group’s profits in the full year to December 31, 2015, reflecting a difficult macro-economic environment.

The group achieved an overall $0,1 million profit for the year from a loss of $5,1 million in 2014.

Audited financial results for the period indicate rental income from the group’s properties decreased by three percent to $7,3 million in 2015 to from $7,5 million in 2014.

FMHL chairman Oliver Mtasa said the drop reflected challenges faced by tenants and the resultant decline in occupancy levels and rentals per square centimetre. The occupancy rate for the period stood at 79 percent.

Mtasa said the group widened investment losses to $4,7 million last year compared to $3,8 million in 2014 in tandem with the downward movement in the stock market.

“Investment property was independently revalued as at 31 December 2015 resulting in fair value losses of $6,6 million,” he said adding;

“The impairment of the investment in Rainbow Tourism Group (RTG) by $2,6 million also contributed to the negative investment outturn.”

This has forced total assets to decline by two percent to $209 million due to fair value loss on investment property.

Mtasa said the decline has since been mitigated by new cash flows as reflected in the increase in money market and held to maturity investments.

However, gross premium written for the period stood at $116 million, one percent above the prior year figure of $115 million on the back of improved performance from the health insurance businesses.

Operating profit before the outturn on the investment portfolio also improved from a loss of $4,4 million in 2014 to a profit of $3,1 million spurred by a $1 million increase in net premium earned.

Mtasa noted that developments on the investment markets adversely affected the total assets in life assurance sector in general, which declined by five percent from $1,6 billion as at September 2014 to $1,56 billion in the same period last year.

He said a combination of higher claims and loses from the equities and property markets also impacted negatively on the performance of the insurance industry with non-life insurance sector experiencing a steep 78 percent drop in profitability while the life insurance sector increased profitability by 32 percent.

FMHL runs First Mutual Health Company, First Mutual Life Assurance, FMRE Life and Health Pvt Ltd, FMRE Property and Casualty Pvt Ltd in Zimbabwe and Botswana, Tristar Insurance and Pearl Properties Ltd.