FIRST MUTUAL HOLDINGS LIMITED Preliminary Report - Unaudited Financial Results | For the period ended 31 December 2021
CHAIRMAN'S STATEMENT
ECONOMIC OVERVIEW
Throughout 2021 COVID-19 continued to negatively impact the global economy, while nations made significant strides towards a return to normal economic activity by way of vaccinating a significant portion of their population. Worldwide the more deadly Delta variant was overtaken by the more infectious Omicron variant. Governments predictably responded with travel bans, increased testing, vaccinations and lockdowns, some of which measures negatively impacted on economic activity and social interaction. In Zimbabwe, the Government announced that 41.3% of the adult population had been vaccinated by 31 December 2021, a commendable achievement compared to the rest of the continent.
The initial Ministry of Finance and Economic Development GDP growth projection of 7.4% for 2021 was subsequently revised upwards to 7.8%. Underpinning the growth was a significant improvement in agricultural and mining production in the second half of the year. In addition, significant infrastructural disbursements in road construction, irrigation expansion and power projects were made during the year thus contributing to GDP growth. Manufacturing industry capacity utilisation is estimated to have increased to approximately 60-65% compared to 47% in the prior year spurred on by increased agricultural and mining output for the year. A combination of diaspora remittances, grant aided institution as well as capital inflows of over US$300 million resulted in a surplus for the year amounting to USD926.8 million.
The economy benefited significantly from the fall in inflation from a year-on-year high of 362.6% in January 2021 to 60.7% by December 2021. This positive trend could be reversed if there is volatility in the value of the Zimbabwe dollar or reserve money growth exceeds the targets set by the authorities. The widening gap of the premium between the Reserve Bank of Zimbabwe (RBZ) Dutch Foreign Currency Auction system and the alternative market exchange rates as well as availability timelines for funds allocated at the auction may impact on business confidence. Volatile exchange rate movements have a negative impact on business operations and certain investment asset classes.
The Zimbabwe Stock Exchange (ZSE) All Share Index gained 310.5% during 2021, outpacing both inflation and exchange rate movements, resulting in real value gains for listed equity asset class holders. Given the obtaining environment, the Group maintains that real assets remain a viable long-term asset class especially in the light of volatile exchange rate movements which result in heightened currency risk. The Group will continue to invest in real asset portfolios diversifying investments into private equity, property, foreign investments as well as stable currency denominated equities. The Group CEO will adequately cover the performance of our business units suffice it to say that the Group benefited much from its policy of investing in real assets with returns exceeding inflation year on year.
GROUP REGIONAL DEVELOPMENTS
The reinsurance cluster completed a BWP61 million capital raise in Botswana through its partnership with the Aleyo Growth Fund 1 GP (Proprietary) Limited. The Group, through NicozDiamond, also followed its rights in the recapitalisation of Diamond Companhia de Seguros ("Diamond Seguros") with capital injection of US$915,000 in August 2021. The capitalisation resulted in the Company exceeding the minimum regulatory capital to operate in Mozambique.
YEAR END AUDIT
As shareholders were advised in a cautionary announcement issued on 6 April 2022, the Insurance and Pensions Commission (IPEC) intends to perform a forensic investigation on First Mutual Life Assurance Company (FML), a subsidiary of the Group arising from the asset separation exercise initiated by IPEC. FML has, since demutualisation in 2003, separately maintained the assets of the policyholders and the shareholders.
IPEC has deemed the submissions made by FML not to be adequate to enable completion of the review of asset separation at FML. FML is therefore consulting with IPEC to understand the areas of inadequacy and will continue to work closely with the regulator to resolve the outstanding issues in the shortest possible time. More details of the forensic investigation are provided in note 23 of this preliminary report.
The audit of the Group is incomplete pending the finalization of the IPEC forensic investigation of FML because of the possible impact that the results may have on the financial statements as at 31 December 2021. The timeline of three to four months indicated by IPEC for the completion of the forensic investigation exercise will not enable the Group to publish audited financial statements within the Zimbabwe Stock Exchange approved timelines. In the interim, the board of directors, in consultation with the ZSE, has decided to publish unaudited financial information in the form of this preliminary report. The audited financial information as at 31 December 2021 will be finalised and published upon the completion of the FML forensic investigation.
FINANCIAL HIGHLIGHTS
In October 2019 the Public Accountants and Auditors Board concluded that the conditions for applying International Accounting Standard (IAS) 29 - Financial Reporting in Hyperinflation Economies had been met in Zimbabwe. The historical cost financial results have been restated to take into account changes in the purchasing power of the local currency during the year. Inflation adjusted financial results therefore represent the main financial statements with historical cost financials provided as supplementary information. The Group has continued to apply IAS 29 for the year ended 31 December 2021.
Comprehensive income highlights
Gross Premium Written Net Premium Earned Rental income Investment income
Fair value gains on investment property
Profit before income tax Profit for the period
Financial position highlights Total assets
Insurance and Investment contract liabilities
Cash generated from
35,928,690 25,010,580 35,211,342 14,990,970
Inflation adjusted | Historical cost |
31 Dec 31 Dec | 31 Dec 31 Dec |
2021 2020 | 2021 2020 |
ZWL000 ZWL000 | ZWL000 ZWL000 |
14,351,063 9,569,302 11,407,035 4,127,231
10,950,373 6,720,506 8,538,628 2,916,579
414,424 480,100
557,471 3,852,705 1,464,678
7,111,988 5,246,177 12,942,135 8,184,676
4,903,334 3,440,447 9,700,252 6,042,925
3,328,805 3,772,596 7,462,946 5,263,774
operations 540,194
Share performance
Market price per share (cents) 2000 Basic earnings per share
(cents) 355
FINANCIAL PERFORMANCE
Statement of comprehensive income
174,758
7,986,877 12,618,398 4,960,793 2,484,114 911,736 875,779
1544 | 2000 | 959 |
280 | 570 | 413 |
Gross Premium Written ("GPW"), at $14.3 billion, increased by 50% in inflation adjusted terms as a result of organic growth on the existing portfolio and the continuous revaluation of insurance policy values in line with inflation to ensure clients have adequate cover.
Net investment income of $2.5 billion reflected an increase of 350% against the same period in 2020. The investment gains were driven by fair value adjustments on listed and unlisted equities in line with the general performance of the ZSE Industrial Index. Overall, the Group incurred an inflation adjusted profit for the period of $3.3 billion mainly due to the increase in the top line as well as fair value gains on investment property and equity instruments.
Statement of financial position
The Group's total assets appreciated in value by 44% from 31 December 2020 to 31 December 2021. The growth is mainly attributable to the fair value adjustment on investment properties and listed equities.
Investment property witnessed significant growth in Zimbabwe dollar values determined as at 31 December 2021. The ZWL significantly depreciated in value against the United States Dollar which also impacted the forward-looking information utilised in the valuation hence the fair value gain of $7.1 billion to 31 December 2021.
SUSTAINABILITY
Our understanding of sustainability is one of managing risks and creating opportunities for both the Group and external stakeholders. The objective of sustainable economic value creation is anchored in the core principles of our corporate strategy and values.
In our insurance business, we make systematic allowance for environmental, social and governance ("ESG") aspects. This holds true in our internal underwriting processes and also applies to our products and services. Sustainability is not only embedded in our core insurance operations but also in our investment philosophy as exemplified by the investment into the First Mutual Park solar plant for clean energy.
The Group remains optimistic of opportunities for business growth in the foreseeable future.
FIRST MUTUAL IN THE COMMUNITY
First Mutual continues to actively contribute to the community in which we operate. We contributed to the national effort to mitigate the impact of COVID-19 through the First Mutual Health vaccination programme which has assisted in resourcing local government clinics. The Group is also playing a key role in equipping university students with financial literacy education through its Future First programme and providing support to cancer awareness programs.
OUTLOOK
The Ministry of Finance and Economic Development is projecting that the economy will recover, with growth projections of 5.5% in 2022 led by infrastructural development as well as increases in the output of the major sectors of the economy including mining and agriculture. The International Monetary Fund's allocation of Special Drawing Rights to mitigate against the impact of COVID-19 will enhance recovery prospects for the country.
The Group will take advantage of its diverse business portfolio, existing and new strategic partnerships, as well as its regional footprint to galvanise a sustained growth trajectory in the future.
DIRECTORATE
There were no changes to the directorate during the period under review.
DIVIDEND
On 28 March 2022 the Board resolved that a final dividend of $115 million, being 15.73 Zimbabwe cents per share, be declared from the profits of the Company for the year ended 31 December 2021. This brings the total dividend for the year to $0.29 or 29.42 cents per share. The dividend will be payable on or about 27 May 2022 to all shareholders of the Company registered on the close of business on 13 May 2022. The shares of the company will be traded cum-dividend on the ZSE up to 10 May 2022 and ex-dividend as from 11 May 2022.
APPRECIATION
On behalf of the Board and myself personally, I would like to extend my heartfelt gratitude to our customers, regulators and wider stakeholders for their support during an unprecedented year overshadowed by the challenges of COVID-19 to which we all had to adapt. We acknowledge the commitment displayed by all staff in executing their duties in such a challenging environment. Finally, I wish to thank my fellow board members for their open and honest contributions in our deliberations, their guidance and support for management, above all, their wisdom.
Amos Manzai Chairman
28 March 2022
GROUP CHIEF EXECUTIVE OFFICER'S REVIEW OF OPERATIONS
During the year ended 31 December 2021 there was a gradual relaxation of lockdown measures associated with the COVID-19 pandemic as measures to mitigate the impact of the pandemic, particularly vaccination roll out programs, yielded positive results. The easing of COVID-19 restrictions facilitated the recovery of economic activity globally and locally though the tourism sector was adversely affected by the advent of the Omicron variant in the fourth quarter of the year.
The Group remained focused on fulfilling its promise on the core pillars of risk management, wealth creation and wealth management by enhancing access to our products and services through digital platforms to reduce the impact of COVID-19 lockdown measures.
OPERATIONS REVIEW
The commentary below relates to the unconsolidated inflation adjusted performance of each subsidiary, unless stated otherwise.
LIFE AND PENSIONS BUSINESS
First Mutual Life Assurance Company (Private) Limited
GPW increased by 119% to $1.83 billion mainly due to inflation related adjustments by employers to basic salaries that drive pension contributions and group life assurance covers in the Employee Benefits division. The underwriting of foreign currency denominated products as well as higher Zimbabwe dollar assurance covers contributed to higher revenue in the retail division. The company adjusted its operating structure to align to changing market preferences and continued to invest in the funeral services unit. Pending the forensic investigation by IPEC, the regulator has allowed FML to continue its operations.
HEALTH BUSINESS
First Mutual Health Company (Private) Limited
The GPW grew by 70% to $5.4 billion mainly due to revision of contributions to maintain the ability to continue meeting the expectations of members as health service costs increased in real terms. In addition, the company experienced growth in foreign currency denominated premiums which tend to have lower shortfalls relative to ZWL premiums. The claims ratio increased to 81.17% from 73.21% in the same period owing to increased access to services by members and charges by service providers rising faster than thepremiums paid by members. Membership declined in numbers from 131,196 members in December 2020 to 117,880 members by December 2021, reflecting the challenging economic environment which limited the capacity of some clients to pay contributions. The Group continued with initiatives to invest in facilities for improved affordable services for members with additional pharmacies and clinics being opened.
SHORT-TERM INSURANCE BUSINESS
NicozDiamond Insurance Limited
GPW grew by 34% to $4.43 billion due to continuous asset value revisions to protect clients against insurance value erosion through inflation and organic growth within the existing portfolios. There was an increased preference for USD denominated policies by clients as a hedge against insurance value erosion in local currency. The claims ratio at 35% was in line with the prior year ratio of 36% mainly as a result to continued lockdowns.
Diamond Seguros
Diamond Seguros migrated from an associate to a subsidiary with effect from 1 December 2020, however performance analysis is on full year's financial statements. GPW grew by 75% in 2021 as a result of improved broker business due to improved confidence after recapitalisation of the business in the third quarter of 2020. In Mozambican Metical (MZN), the GPW growth was 29% to MZN193 million. The claims ratio at 32% was higher than the comparative period of 18% due to the stricter lockdowns in 2020. In August 2021, the Group concluded a further capital injection of USD0.9 million through a rights offer to ensure that the company exceeded the revised minimum regulatory capital level, thus increasing its shareholding from 50.4% to 71.4%.
REINSURANCE BUSINESS
First Mutual Reinsurance Company Limited - Zimbabwe
The GPW increased by 70% to $588.3 million principally due to improved business written in foreign currency. The reintroduction by the authorities in July 2020 of the policy permitting the payment for goods and services in local and foreign currency led to an increase in USD policies which led to more business for reinsurers as there was limited USD underwriting capacity locally. The claims ratio further increased to 55% from 49% in 2020 as a result of the change in the business mix.
FMRE Property and Casualty (Proprietary) Limited - Botswana
GPW grew by 4% to $2.1 billion in 2021. The annual growth was 14% in Botswana Pula terms, at BWP179.1 million, arising from improved local and international treaty participation and growth of specialist lines of business under the casualty segment. The claims ratio, at 39%, was marginally lower than the prior period level of 41%.
PROPERTY AND WEALTH MANAGEMENT BUSINESSES
First Mutual Properties Limited
Revenue increased by 38% to $582 million in 2021 due to rental reviews in line with inflationary trends and an increase in the occupancy rate to 89.33% in 2021 compared to 88.22% in 2020. Independent investment property valuations as at 31 December 2021 resulted in increased fair value gains in the investment property portfolio value, due to the significant movement in the exchange rate and inflationary pressures which impacted expected rentals in the future from a capitalisation perspective.
First Mutual Wealth Management (Private) Limited
Investment management fees grew by 21% to $83 million in inflation adjusted terms mainly due to the increase in funds under management underpinned by the growth on the ZSE All Index performance. Funds under management grew by 128% during the period under review. The company also saw an improvement in the third party funds under management during the year.
SUSTAINABILITY
Our objective is to create sustainable economic value through the adoption of a long-term approach to environmental stewardship, social responsibility and corporate governance. This is critical to our business success, as we are committed to delivering on our promises to our stakeholders, in particular our customers, investors and society as a whole.
HUMAN CAPITAL
The exceptional quality and resilience of our employees is the core pillar to our success. In spite of the adverse environment, our team remained steadfast in its commitment to serve our clients and implement our strategy. We remained focused on the safety and wellbeing of our employees in the COVID-19 era. Although the remote working concept was in force, the team remained cohesive with a strong sense of togetherness and unity of purpose across the Group. We will continue to invest in human capital retention and development through various programmes which include migrating towards online training platforms.
CORONAVIRUS PANDEMIC
It is difficult to comment on our operational and financial performance without mention of the pandemic which has been in our midst during the last two financial years. First Mutual Health was actively involved in the government driven vaccination exercise by providing human and financial resources. As a Group, we lost two colleagues due to the pandemic and we express our heartfelt condolence to their families. We have continued to take measures to ensure the safety and wellbeing of our employees, customers and other stakeholders.
LOOKING AHEAD
While there are uncertainties, the Group's solid financial position, coupled with a diversified business model, are expected to deliver sustainable growth and value creation for all our stakeholders. We remain confident in the country's medium-term economic prospects and will thus continue to invest in core businesses and complementary areas.
During 2021, this approach included the recapitalisation of our insurance subsidiary in Mozambique, Diamond Seguros, to meet regulatory capital requirements and capacitating the unit to underwrite health insurance business. At the close of the year, the Group finalised the capital raise for the reinsurance cluster with BWP61 million raised through a Botswana based financial partner, Aleyo Growth Fund 1 GP (Proprietary) Limited. These two projects and other initiatives created a platform for further growth in the future
APPRECIATION
On behalf of First Mutual, I would like to thank all our stakeholders for the continued trust in the Group. We are a reliable partner and remain focused on our customers as we strive to exceed your expectations.
Douglas Hoto
Group Chief Executive Officer
28 March 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2021
Gross premium written Reinsurance
Net premium written Unearned premium reserve Net premium earned Rental income
Fair value adjustments - investment property Net investment income
Interest income from investments Net interest income
Fee income:
- Insurance contracts
- Investment contracts Other income
Foreign currency exchange gain Monetary loss- IAS29
Total income
EXPENDITURE
Pension benefits
Insurance claims and loss adjustment expenses Insurance claims and loss adjustment expenses recovered from reinsurers
Net insurance benefits and claims Movement in insurance contract liabilities Movement in shareholder risk reserve Investment loss on investment contract liabilities Movement in member assistance fund
Acquisition of insurance and investment contracts expenses Administration expenses
Allowance for expected credit losses Finance cost
Total expenditure
Profit before share of (loss)/profit of associate Share of profit/(loss) of associate
Profit before income tax
Income tax expense
Profit for the period
Other comprehensive income/(loss)
Other comprehensive income/(loss) to be reclassified to statement of comprehensive income in subsequent period
Exchange (loss)/gain on translating foreign operations Share of other comprehensive income from Associates Other comprehensive income/(loss) to be reclassified to statement of comprehensive income in subsequent periods
Total comprehensive profit for the period
Profit attributable to: Non-controlling interest Equity holders of the parent
Profit for the period
Comprehensive income attributable to: Non-controlling interest
Equity holders of the parent
Total comprehensive income for the period
UNAUDITED 31-Dec-21 ZWL000 14 351 063 (3 124 676) | UNAUDITED 31-Dec-21 ZWL000 11 407 035 (2 489 181) | |
11 226 387 (276 014) | 7 093 102 (372 596) | 8 917 854 (379 226) |
10 950 373 599 540 7 111 988 2 509 904 63 861 71 102 450 769 13 421 236 743 254 739 (972 359) | 6 720 506 414 424 5 246 177 557 471 18 175 - 318 320 2 701 399 450 464 592 (1 797 576) | 8 538 628 480 100 12 942 135 3 852 705 57 556 58 118 324 142 10 968 158 690 204 515 - |
21 290 081 | 12 344 240 | 26 627 557 |
(375 443) (6 848 337) 711 263 | (129 802) (3 628 078) 275 614 | (310 010) (5 458 563) 594 827 |
(6 512 517) | (3 482 266) | (5 173 746) |
|
| (6 445 136) - (1 223 438) - (777 361) (3 158 796) (181 154) (1 321) |
(16 390 587) | (8 901 006) | (16 960 952) |
4 899 494 3 840 | 3 443 234 (2 787) | 9 666 605 33 647 |
4 903 334 (1 574 529) | 3 440 447 332 149 | 9 700 252 (2 237 306) |
3 328 805 | 3 772 596 | 7 462 946 |
(182 702) 14 309 | 427 703 28 719 | (44 246) 14 309 |
(168 393) | 456 422 | (29 937) |
3 160 412 | 4 229 018 | 7 433 009 |
747 497 2 581 308 |
|
|
3 328 805 | 3 772 596 | 7 462 946 |
759 220 2 401 192 |
|
|
3 160 412 | 4 229 018 | 7 433 009 |
355.40 354.92 341.30 340.84 | 569.74 568.97 556.47 555.72 |
HISTORICAL COST UNAUDITED UNAUDITED 31-Dec-20
INFLATION ADJUSTEDNote
ZWL000
19 19
11 407 035
8 917 854
4 127 231 (1 183 181) 2 944 050
(27 471)
8 538 628
2 916 579
480 100
174 758
12 942 135
8 184 676
20 20
3 852 705
1 464 678
57 556
9 825 -
324 142
123 685
10 968
602
158 690
87 402
204 515 -
406 183 -
26 627 557
13 368 388
21 21 21 21
(57 811) (1 731 146)
594 827
125 461 (1 663 496)
(3 602 820)
-
26 647 (422 092)
- (8 323)
(260 323)
(1 179 117)
(212 733)
(1 290)
(7 323 547)
9 666 605 33 647
6 044 841
(1 916)
9 700 252
6 042 925
(779 151)
7 462 946
5 263 774
14 309
483 748 17 837
501 585
7 433 009
5 765 359
3 324 864
4 138 082
2 278 685 2 985 089
7 462 946
5 263 774
3 355 951
2 279 100
4 077 058
3 486 259
7 433 009
5 765 359
Basic earnings per share (cents) 569.74 412.62
Diluted earnings per share (cents) 568.97 412.22
Headline earnings per share (cents) 556.47 410.66
Diluted headline earnings per share (cents) 555.72 410.27
CONSOLIDATED STATEMENT OF CASH FLOWS
INFLATION ADJUSTED
HISTORICAL COST
Profit before income tax | 9 700 252 | 6 042 925 |
Total non- cash and separately disclosed items | (5 507 502) | |
Operating cash flows before working capital changes | 1 495 109 | 535 423 |
Working capital changes | 351 638 | |
Cash generated from operations | 1 024 497 | 887 061 |
Finance costs on lease liability | (1 290) | |
Cash settled share based payments | ||
Interest received | 57 556 | 9 825 |
Interest paid | - | |
Tax paid | (19 817) | |
Net cash flows generated from operating activities | 911 736 | 875 779 |
Net cash flow generated from/(used in) investing activities | 156 902 | (209 068) |
Net cash flow generated from/(used in) financing activities | 100 259 | (32 907) |
Net increase in cash and cash equivalents | 1 168 897 | 633 805 |
Cash and cash equivalents at the beginning of the year | 1 659 410 | 279 516 |
Effects of exchange rate changes on cash and cash equivalents | 225 531 | 746 089 |
Effects of inflation on cash and cash equivalents | - | |
Cash and cash equivalents at the end of the period | 3 053 838 | 1 659 410 |
STATEMENT OF FINANCIAL POSITION | ||
FOR THE PERIOD ENDED 31 DECEMBER 2021 | ||
Note |
INFLATION ADJUSTED
UNAUDITED 31-Dec-21 ZWL000 4 903 334 (3 455 285) | UNAUDITED 31-Dec-21 ZWL000 9 700 252 (8 205 143) | |
1 448 049 (768 623) | 2 486 841 46 342 | 1 495 109 (470 612) |
679 426 (1 609) (148 098) 63 861 (14 056) (39 330) | 2 533 183 (2 157) 18 175 (65 087) | 1 024 497 (1 321) (124 452) 57 556 (14 056) (30 488) |
540 194 217 671 132 142 | 2 484 114 (200 681) (108 104) | 911 736 156 902 100 259 |
890 007 | 2 175 329 | 1 168 897 |
2 671 650 (623 020) 115 201 | 2 018 727 (402 949) (1 119 455) | 1 659 410 225 531 - |
3 053 838 | 2 671 650 | 3 053 838 |
UNAUDITED 31-Dec-20
ZWL000
INFLATION ADJUSTEDHISTORICAL COST
HISTORICAL COSTTOTAL EQUITY AND LIABILITIES
Deferred tax 18 Current income tax liabilities
Total liabilities
ASSETS
Property, plant and
equipment 5
Investment property 6 Right of use of assets -
IFRS 16 7 Goodwill
Other intangible assets
Investment in subsidiaries 8 Investment in associates
Financial assets:
- Equity securities at fair
value through profit or loss 9
- Debt securities at
amortised cost 10 Deferred acquisition costs
Deferred tax asset
Non current assets held for sale
Income tax asset Inventory
Insurance, tenant and other
receivables 11 Cash and balances with
banks 12
TOTAL ASSETS
EQUITY AND LIABILITIES Equity attributable to equity holders of the parent
Share capital Share premium Non-distributable reserves Retained profits
Total equity attributable to equity holders of the parent
Non-controlling interests Total equity
Liabilities
Life insurance contracts with and without DPF and investment contracts with
DPF liabilities 13 Investment contract
liabilities without DPF 14
Shareholder risk reserves 15 Member assistance fund Borrowings
Financial liability
Lease liability - IFRS 16 7 Insurance contract liabilities -
short term 16 Insurance liabilities - life assurance
Share based payment liabilities
Other payables 17
UNAUDITED GROUP 31-Dec-21 ZWL 479 484 22 506 950 13 967 24 303 16 685 - 353 079 - 6 133 603 186 656 243 329 107 560 - - 43 784 2 765 452 3 053 838 | UNAUDITED GROUP 31-Dec-21 ZWL 140 853 22 506 950 13 967 24 303 3 668 - 213 844 6 133 603 186 656 162 029 103 318 - - 30 366 2 637 947 3 053 838 | UNAUDITED COMPANY 31-Dec-21 ZWL000 6 777 - 58 290 - - 7 028 687 5 967 310 771 23 635 - - - - 2 675 117 612 47 994 | UNAUDITED COMPANY 31-Dec-21 ZWL000 2 210 - 23 124 - - 7 425 259 4 144 310 771 23 635 - - - - 455 117 612 47 994 | |||
35 928 690 | 25 010 580 | 35211342 | 14 990 970 | 7 602 408 | 5 491 480 | 7 955 204 |
120 450 2 415 562 747 811 4 331 618 | 44 750 2 415 562 954 930 1 851 997 | 54 878 39 417 489 882 7 408 908 | 727 39 417 569 159 3 352 409 | 120 450 2 415 562 42 899 4 853 268 | 44 750 2 415 562 54 632 2 871 350 | 54 878 39 418 345 7 690 335 |
7 615 441 | 5 267 239 | 7 993 085 | 3 961 712 | 7 432 179 | 5 386 294 | 7 784 975 |
5 989 968 | 5 260 574 | 5 983 668 | 2 653 035 | - | - | - |
13605409 | 10 527 813 | 13 976 753 | 6 614 747 | 7 432 179 | 5 386 294 | 7 784 975 |
10 939 010 1 679 388 - 9 041 166 721 568 099 15 036 4 427 028 108 749 266 720 771 482 3 275 743 96 264 | 7 235 137 751 740 - 14 556 - - 23 496 3 823 471 28 750 146 449 704 056 1 649 449 105 663 | 10 939 010 1 679 388 - 9 041 166 721 568 099 15 036 3 357 032 108 749 266 720 770 251 3 258 278 96 264 | 4 493 874 466 919 - 9 041 - - 14 594 1 806 597 17 857 90 962 437 302 973 449 65 629 | - - - - - - 30 310 - - 95 841 44 078 - - | - - - - - - 5 150 - - 51 834 48 202 - - | - - - - - - 30 310 - - 95 841 44 078 - - |
22323281 | 14 482 767 | 21 234 589 | 8 376 223 | 170 229 | 105 186 | 170 229 |
35928690 | 25 010 580 | 35 211 342 | 14 990 970 | 7 602 408 | 5 491 480 | 7 955 204 |
2 210 - 23 124 - -
UNAUDITED COMPANY 44 561 ZWL000
169 - 2 808 - -
7 425 259 3 837 074
4 144
310 771 23 635 -
113 025
- - 455 117 612 47 994
- - - - - 507
68 590
11 542
7 955 204 4 033 715
54 878
39 418
345
727 39 417 567
7 690 335 3 927 670
7 784 975 3 968 381
-
7 784 975 3 968 381
- - - - -
30 310
3 199
- -
95 841
32 195
44 078 - -
29 940 - -
170 229
65 334
7 955 204 4 033 715
--- - - - - -
- -
STATEMENT OF CHANGES IN EQUITY | ||
FOR THE ENDED 31 DECEMBER 2021 | ||
INFLATION ADJUSTED | Share | |
Share | ||
capital | premium | |
reserves | ||
ZWL000 | ZWL000 | |
As at 1 January 2020 | 44 739 | 2 414 340 |
Reclassification to retained earnings | - | - |
Prior year adjustment | ||
Restated as at 1 January 2020 | 44 739 | 2 414 340 |
Profit for the year | - | - |
Other comprehensive (loss)/income | - | - |
Total comprehensive (loss)/income | - | - |
Transactions with shareholders in their | ||
capacity as owners | ||
Issue of shares | 11 | 1 222 |
- share options | 11 | 1 222 |
-share based payments | - | - |
Acquisition of non-controlling interest | - | - |
Dividend declared and paid | - | - |
As at 30 December 2020 | 44750 | 2415562 |
As at 1 January 2021 | 44750 | 2415562 |
Profit for the year | - | - |
Other comprehensive income | - | - |
Total comprehensive income | - | - |
Transactions with shareholders in their | ||
capacity as owners | ||
Issue of shares | 75 700 | - |
- share options | 11 518 | - |
-share based payments | 64 182 | - |
Issue of Diamond Seguros shares to non- | ||
controlling interest | - | - |
Acquisition of non-controlling interest in Diamond | ||
Seguros | - | - |
Issue of shares in FMRE Holdings | - | - |
Dividend declared and paid | - | - |
As at 31 December 2021 | 120450 | 2415562 |
HISTORICAL COST | Share | |
Share | ||
capital | premium | |
reserves | ||
ZWL000 | ZWL000 | |
As at 1 January 2020 | 724 | 39 046 |
Reclassification to retained earnings | - | - |
Restated as at 1 January 2020 | 723 | 39 045 |
Profit for the year | - | - |
Other comprehensive (loss)/income | - | - |
Total comprehensive (loss)/income | - | - |
Transactions with shareholders in their | ||
capacity as owners | ||
Issue of shares | 3 | 371 |
- share options | 3 | 371 |
- share based payments | - | - |
Acquisition of non-controlling interest | - | - |
Dividend declared and paid | - | - |
As at 30 December 2020 | 727 | 39 417 |
As at 1 January 2021 | 727 | 39 417 |
Profit for the year | - | - |
Other comprehensive income | - | - |
Total comprehensive income | - | - |
Transactions with shareholders in their | ||
capacity as owners | ||
Issue of shares | 54 151 | - |
- share options | 216 | - |
- share based payments | 53 935 | - |
Issue of Diamond Seguros shares to non- | ||
controlling interest | - | - |
Acquisition of non-controlling interest in Diamond | ||
Seguros | - | - |
Issue of shares in FMRE Holdings | - | - |
Dividend declared and paid | - | - |
As at 31 December 2021 | 54 878 | 39 417 |
Non-
distributable reserves ZWL000
Retained earnings ZWL000
879 540 (550 636)
-
- 69 218
499 963 (101 840)
- 2 027 733
455 753
-
455 753 2 027 733
(785) ( 1 233)
448
- - -
-
-
- ( 73 896)
954930 1851997
954930 1851997
- (180116)
2581308 -
( 180116) 2581308
(11 733) ( 11 733)
- - 14 716 (29 987)
215 215 - - 5 002 -
- (106 903)
747811 4331618
Non-
distributable reserves ZWL000
68 229
68 228 -Retained profits ZWL000 389 819 - 389 819
- 2 985 089
501 170
-
501 170 2 985 089
(238) ( 374)
136
-- - - -
- ( 22 499)
569 159 3 352 409
569 159 | 3 352 409 |
- | 4 138 082 |
( 61 024) | - |
( 61 024) | 4 138 082 |
(223) | 7 |
( 223) | 7 |
- | - |
- | - |
11 957 | 4 466 |
( 29 987) | - |
- | ( 86 056) |
TotalNon-
equity for parent ZWL000 2 787 983 -
controlling interest
ZWL000 3 483 044 -Total equity ZWL000 6 271 027 -
69 218
69 218
2 857 201
3 483 044
6 340 245
2 027 733
1 744 862
3 772 595
455 753
668
456 421
2 483 486
1 745 530
4 229 016
448 - 448
- - -
448 -
448
- (73 896)
42 786 ( 10 785)
42 786
(84 681)
5267239
5267239 2581308 (180116)
2401192
5260574
5260574 747497 11723
759220
1052781310527813 3328805 (168393) 3160412
64 182 -- - -
64 182 -
64 182
64 182
-7 027
7 027
19 718 (29 987) (106 903)
(19 718)
- (17 134)
- (29 987) (124 037)
7615441
5989968
13605409
TotalNon-
equity for parent ZWL000 497 817 -
controlling interest ZWL000 350 636 -Total equity ZWL000 848 453 -
497 817
350 636
848 453
2 985 089
2 278 685
5 263 774
501 170
415
501 585
3 486 259
2 279 100
5 765 359
136 - 136
- - - 26 575 ( 3 276)
136 -
136
- (22 499)
26 575
(25 775)
3 961 712
2 653 035
6 614 747
3 961 712
2 653 035
6 614 747
4 138 082 (61 024) 4 077 058
3 355 951
3 324 864
31 087
7 462 946 (29 937) 7 433 009
53 935 -- - -
53 935 -
53 935
53 935
-5 092
5 092
16 423 (29 987) (86 056)
( 13 987)
( 16 423)
- (29 987) (100 043)
489 882 7 408 908 7 993 085 5 983 668 13 976 753
NOTES TO THE FINANCIAL STATEMENTS
1 Corporate information
The ultimate parent of the Company is National Social Security Authority ("NSSA") which owns 65.53% (2020: 66.22%) directly and an additional 7.02% (2020: 7.10%) indirectly through Capital Bank Limited (under liquidation). NSSA owns 87% (2020: 87%) of Capital Bank Limited.
The registered office is located at Second Floor, First Mutual Park, 100 Borrowdale Road, Borrowdale, Harare, Zimbabwe. The consolidated historical and inflation adjusted financial statements of the Company and the Group for the year ended 31 December 2021 were authorised for issue in accordance by a resolution of the Directors at a meeting held on 15 March 2022.
2 Statement of compliance
These financial results should be read in conjunction with the complete set of financial statements for the year ended 31 December 2021. The Group's financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("the IASB"), International Financial Reporting Committee Interpretations ("IFRIC") as issued by the International Financial Reporting Interpretations Committee ("IFRS IC") and in a manner required by the Zimbabwe Companies and other Business Entities Act (Chapter 24:31), except for non-compliance with IAS 21 'The effects of changes in foreign exchange rates' and IAS 8 'Accounting policies - Changes in accounting policies, estimates and errors" in 2019. The financial statements are based on statutory records that are maintained under the historical cost convention except for investment properties, equity securities at fair value through profit or loss and insurance and investment contract liabilities that have been measured on a fair value basis. For fair presentation in accordance with International Accounting Standard ("IAS") 29, 'Financial Reporting in Hyper-inflationary Economies', the historical cost information has been restated for changes in the general purchasing power of the Zimbabwe dollar ("ZWL " or "$") and appropriate adjustments and reclassifications have been made. Accordingly, the inflation adjusted financial statements represent the primary financial statements of the Group and Company and historical cost information is supplementary.
The accounting policies applied in the audited abridged financial results are consistent with the accounting policies in the prior year financial statements, unless otherwise stated.
3 Audit Opinion
The audit of the Group is incomplete pending the finalisation of the Insurance and Pension Commission forensic audit currently underway at one of the Group's significant subsidiaries, First Mutual Life Assurance Company.
4 Functional and Presentation Currency
a) Functional and presentation currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The financial statements are presented in the ZWL which is the Company and the Group's functional and presentation currency.
b) Currency developments in Zimbabwe
On 20 February 2019, the Reserve Bank of Zimbabwe ("RBZ") Governor announced a new Monetary Policy Statement ("MPS") whose highlights were:
• Denomination of Real Time Gross Settlement ("RTGS") balances, bond notes and coins collectively as RTGS dollars ("RTGS$"). RTGS$ become part of the multi-currency system.
• RTGS$ to be used by all entities (including government) and individuals in Zimbabwe for purposes of pricing of goods and services, record debts, accounting and settlement of domestic transactions.
• Establishment of an inter-bank foreign exchange market where the exchange rate will be determined by market forces. The interbank market opened trading at a rate of USD1 to RTGS$ 2.5
The MPS announcement was followed by the publication of Statutory Instrument ("SI") 33 of 2019 on 22 February 2019. The SI gave effect to the Introduction of the RTGS$ as legal tender and prescribed that "for accounting and other purposes" certain assets and liabilities and the effective date would be deemed to be RTGS$ at a rate of 1:1 to the USD and would become opening RTGS$ values from the effective date.
On 24 June 2019 another SI 142 was issued resulting in the abolishment of the multicurrency regime and introducing the ZWL as a mono-currency or sole tender. The ZWL was introduced at par with the RTGS$.
On 26 March 2020, in response to the COVID-19 induced national lockdown, the RBZ announced the authorisation of the use of free funds in payment of goods or services. In the same announcement, the interbank foreign exchange was fixed at USD1:ZWL25.
On 23 June 2020, the RBZ introduced Dutch foreign exchange auction system, resulting in the free float of the exchange rate. The quoted exchange rates is determined as a weighted average of the bids on the auction.
On 24 July 2020, the Government of Zimbabwe issued SI 185 of 2020 which granted permission to providers of goods and services to display dual prices, in ZWL and USD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
5 Property, vehicles and equipment
At 1 January
Prior year adjustment
Additions
Disposals
Depreciation charge and
disposal
At 31 December
6 Investment property
At 1 January
Additions
Transfer to Non-current asset
held for sale
Fair value adjustments At 31 December
7 Leases
The Group's fair values of its investment properties are based on valuations performed by Knight Frank an accredited independent valuer. Knight Frank is a specialist in valuing these types of investment properties and has recent experience in the location and category of the investment properties being valued. The valuations are based upon assumptions on future rental income, anticipated maintenance costs, future development costs and the appropriate discount rate. Where the market information is available, the valuers make use of market information from transactions of similar properties. Significant judgements were applied in the current year as a result of the uncertainties resulting from the hyper-inflationary economic environment, currency shifts, excessive market volatility lack of recent transactions conducted in ZWL$.
Right of use of assets
As at 1 January
Modification
Depreciation charge for
the year
Exchange rate effects At 31 December
Lease liability
Current
Non-current
At 31 December
8 Investment in subsidiaries
First Mutual Microfinance
(Private) Limited
First Mutual Life Assurance
Company (Private) Limited
First Mutual Health
Company (Private) Limited
First Mutual Reinsurance
Company (Private) Limited
FMRE Property & Casualty
(Proprietary) Limited
First Mutual Wealth
Management (Private)
Limited
NicozDiamond Insurance
Limited
Total
9 Financial assets at fair value through profit or loss
At 1 January
Purchases
Disposals
Fair value gain on unquoted investments
Fair value gain on quoted
equities
At 31 December
10 Debt securities at amortised cost
At 1 January
Purchases
Maturities
Monetary gain/ loss
adjustment
UNAUDITED
GROUP 31-Dec-21
ZWL000
463 178
105 645 (32 487)
(56 852)
UNAUDITED
GROUP 31-Dec-21
ZWL000
55 827
96 365 (7 574)
(3 765)
UNAUDITED COMPANY 31-Dec-21
ZWL000
4 772
2 609 (6 678)
6 074
UNAUDITED COMPANY 31-Dec-21
ZWL000
169
2 083 (74)
32
479 484
463 178
140 853
55 827
6 777
4 772
2 210
15 373 977 20 985
- 7 111 988
10 206 279 118
(78 596) 5 246 176
9 549 054 15 761
- 12 942 135
1 413 176 19
(48 818) 8 184 677
- - - -
- - - -
- - - -
22 506 950
15 373 977
22 506 950
9 549 054
-
-
-
HISTORICAL COST
UNAUDITED UNAUDITED
COMPANY COMPANY
GROUP
GROUP
GROUP
GROUP
COMPANY
COMPANY
COMPANY
COMPANY
31-Dec-20
31-Dec-21
31-Dec-20
31-Dec-21
31-Dec-20
31-Dec-21
31-Dec-20
31-Dec-21
31-Dec-20
ZWL000
ZWL000
ZWL000
ZWL000
ZWL000
ZWL000
ZWL000
ZWL000
ZWL000
1 285 480
1 333 419
1 285 480
828 211
-
-
-
-
90 110
71 049
90 110
44 130
-
-
-
-
-
-
-
-
19 991
21 580
19 991
13 404
1 389 862
596 429
1 262 357
315 832
97 621
88 850
97 621
55 186
2 765 452
2 000 897
2 637 947
1 188 173
117 612
110 430
117 612
68 590
1 062 559
963 338
1 062 559
598 347
72
243
72
151
1 991 279
1 708 312
1 991 279
1 061 063
47 922
18 340
47 922
11 391
3 053 838
2 671 650
3 053 838
1 659 410
47 994
18 583
47 994
11 542
7 235 137
5 083 423
4 493 874
703 858
-
-
-
-
3 703 873
2 151 714
6 445 136
3 790 016
-
-
-
-
10 939 010
7 235 137
10 939 010
4 493 874
-
-
-
-
751 740
329 618
466 919
45 639
-
-
-
-
927 648
422 122
1 212 469
421 280
-
-
-
-
1 679 388
751 740
1 679 388
466 919
-
-
-
-
-
192 449
-
26 647
-
-
-
-
-
(192 449)
-
(26 647)
-
-
-
-
-
-
-
-
-
-
-
-
689 327
503 317
689 327
312 620
-
-
-
-
603 123
1 025 708
603 123
637 086
-
-
-
-
787 551
572 661
787 551
355 690
-
-
-
-
238 244
133 743
238 244
83 070
-
-
-
-
215 756
53 578
215 756
33 278
-
-
-
-
1 852 366
1 336 460
782 370
261 869
-
-
-
-
40 661
198 004
40 661
122 984
-
-
-
-
4 427 028
3 823 471
3 357 032
1 806 597
-
-
-
-
724 876
664 295
723 645
412 606
33 261
43 789
33 261
27 199
319 764
162 056
318 533
100 656
4 216
404
4 216
251
172 446
150 529
172 446
93 496
16 810
35 698
16 810
22 173
145 907
131 648
145 907
81 769
11 939
6 977
11 939
4 334
49 872
211 771
49 872
131 535
45
73
45
45
36 887
8 291
36 887
5 150
251
637
251
396
46 606
39 761
46 606
24 696
-
-
-
-
-
-
-
-
10 043
4 413
10 043
2 741
771 482
704 056
770 251
437 302
43 304
48 202
43 304
29 940
1 649 449
2 099 574
973 449
281 692
-
-
-
-
1 626 294
(450 125)
2 284 829
691 757
-
-
-
-
3 275 743
1 649 449
3 258 278
973 449
-
-
-
-
169 131
2 083 79 -
32
2 210
- - - - -
At 31 December
28 612 - (8 131) (6 514) | 17 772 - (5 050) 1 245 | 38 166 36 015 (15 890) - | 2 808 26 620 (6 304) - | |||
13 967 | 28 613 | 13 967 | 17 772 | 58 290 | 38 165 | 23 124 |
1 713 13 323 | 2 663 20 833 | 1 713 13 323 | 1 654 12 940 | 4 295 26 015 | 2 710 2 440 | 4 295 26 015 |
15 036 | 23 496 | 15 036 | 14 594 | 30 310 | 5 150 | 30 310 |
- - - - - - - | - - - - - - - | - - - - - - - | - - - - - - - | 22 726 3 727 556 1 019 093 587 450 747 773 65 142 946 483 | 15 506 2 264 994 658 734 366 576 755 410 14 847 1 059 009 | 10 409 3 711 601 960 999 595 114 745 411 58 563 1 733 255 |
- | - | - | - | 7 116 223 | 5 135 076 | 7 815 352 |
3 427 998 355 435 (350 833) 141 135 2 693 917 | 2 518 873 829 094 (647 847) 8 446 719 432 | 2 129 191 275 531 (375 877) 312 376 3 792 382 | 348 767 296 984 (143 010) 182 121 1 444 329 | 181 970 - (57 993) - 186 794 | 110 053 124 502 (233 868) - 181 283 | 113 025 - (54 068) - 251 814 |
6 133 603 | 3 427 998 | 6 133 603 | 2 129 191 | 310 771 | 181 970 | 310 771 |
132 764 154 304 (19 893) (80 519) | 68 005 306 515 (222 705) (19 051) | 82 462 119 615 (15 421) | 9 416 140 853 (67 807) | - 23 635 - | - - - | - - - |
186 656 | 132 764 | 186 656 | 82 462 | 23 635 | - | - |
2 808 26 620
(41) 169
- - - - -
1 030
5 616
(3 838)
- 23 124
-
2 808
4 295
1 683
26 015
1 516
30 310
3 199
10 409
4 440
3 711 601
1 803 989
960 999
359 718
595 114
246 717
745 411
469 199
58 563
6 479
1 733 255
946 532
7 815 352 3 837 074
11 Insurance, tenant and other receivables
Insurance receivables
Tenant receivables
Amounts due from Group
companies
Other receivables Total
12 Cash and balances with banks
Money market investments
with original maturities less
than 90 days
Cash at bank and on hand
Cash and balances with
banks
13 Life insurance contracts and investment contracts with
Discretionary Participating
Features ("DPF") liabilities
At 1 January
Movement
At 31 December
14 Investment contract liabilities without DPF
At 1 January Movement
At 31 December
15 Shareholder risk reserve At 1 January
Movement
At 31 December
16 Insurance contract liabilities - short term
Outstanding claims
Reinsurance
Losses incurred but not
reported
Members savings pot
Premium received in
advance
Unearned premium reserve
Commissions
Total
17 Other payables
Other payables Provisions
113 025 - (54 068)
15 238 68 677 (88 621)
Payroll and statutory payables
Accrued expenses Trade payables
- 251 814 310 771
- 117 731 113 025
Property business related liabilities
Amounts due to group companies
Total
18 Deferred income tax
At 1 January
-
-
Recognised through
- 23 635
statement of
-
-
comprehensive income
HISTORICAL COST
INFLATION ADJUSTED
HISTORICAL COST
UNAUDITED UNAUDITED
UNAUDITED UNAUDITED
UNAUDITED UNAUDITED
Total
-23 635
19 Net premium written
Pension and savings
business
Life assurance
Health insurance
Property and casualty Gross premium written Less: Reinsurance
Net premium written
20 Net investment income
Dividend received
Fair value gain on unquoted
equities at fair value through profit or loss
Gain from disposal of quoted investments at fair value through profit or loss Investment expenses
Fair value gain on quoted equities at fair value through profit or loss
Total investment income before interest income Interest income
Total net investment income
21 Net insurance claims and benefits
Insurance claims and loss
adjustment expenses:
Health insurance
Life assurance
Property and casualty
Total insurance claims and loss adjustment expenses
Less: Insurance claims and
benefits expenses recovered
from reinsurers
Net total insurance claims
expense
Pensions benefits
Net insurance claims and
benefits
22 Companies Act (24.03) and IFRS mandatory disclosures
Staff costs
Directors' fees
- Holding company
- Group companies
Depreciation of property,
vehicles and equipment
Audit fees
UNAUDITED
GROUP 31-Dec-21
ZWL000
1 480 873
347 157
5 449 988
7 073 045
UNAUDITED
GROUP 31-Dec-21
ZWL000
1 180 795
287 276
4 350 062
5 588 902
UNAUDITED COMPANY 31-Dec-21
ZWL000
- - - -
UNAUDITED COMPANY 31-Dec-21
ZWL000
- - - -
14 351 063 (3 124 676)
9 569 302 (2 476 200)
11 407 035 (2 489 181)
4 127 231 (1 183 181)
-
-
-
11 226 387
7 093 102
8 917 854
2 944 050
-
-
-
250 512
141 135
134 049 (575 660)
2 559 868
53 044
8 446
(40 637) (182 814)
719 432
194 196
312 376
103 914 (446 249)
3 688 468
31 829
182 121
(66 890) (126 711)
1 444 329
-
-
- -
-
-
-
- -
-
-
-
- -
-
2 509 904 63 861
557 471 18 175
3 852 705 57 556
1 464 678 9 825
- -
- -
- -
2 573 765
575 646
3 910 261
1 474 503
-
-
-
4 423 593
326 776
2 097 968
2 355 493
83 241
1 189 344
3 514 654
270 249
1 673 660
1 092 547
38 750
599 849
- - -
- - -
- - -
6 848 337
(711 263)
3 628 078
(275 614)
5 458 563
(594 827)
1 731 146
(125 461)
-
-
-
-
-
-
6 137 074 375 443
3 352 464 129 802
4 863 736 310 010
1 605 685 57 811
- -
- -
- -
6 512 517
3 482 266
5 173 746
1 663 496
-
-
-
2 278 059
20 824
86 110
85 487
55 533
1 805 444
16 504
68 246
10 633
44 012
- - - - -
- - - - -
HISTORICAL COST UNAUDITED UNAUDITED COMPANY COMPANY 31-Dec-20
ZWL000
- - - - - -- - - - - -
-
-
-
-
- -
- -
-
-
- -
- -
-
-
- - -
- - -
-
-
-
-
- -
- -
-
-
- - - - -
- - - - -
23 Events after the reporting period
Prior to the end of the reporting period, NSSA and CBZ Holdings entered into a transaction in which CBZ Holdings proposed to buy 31.22% of the share capital of First Mutual Holdings Limited, making it an Associate. Subsequent to year-end, on 31 January 2022, the CBZ Holdings shareholders approved the transaction , resulting in the finalisation of the transaction between the shareholders in substance.
Asset Separation Inquiry at First Mutual Life
On 15 August 2019, the Insurance & Pensions Commissions (IPEC) wrote a letter to the Industry at large advising on the need to implement post Commission of Inquiry reforms and an Asset Separation exercise for all insurers, including First Mutual Life (FML). The letter, which was issued in terms of Section 64 of the Insurance Act (Chapter 24:07), broadly requested for information from 1996 to 2019 to demonstrate a separation of assets between Policyholders and Shareholders. The main objective of the asset separation exercise was to establish transparency in the way insurers administer funds that belong to the policyholder. This is done by ensuring that separate funds and records of accounts between Shareholder and Policyholder are maintained. Since demutualisation, on 8 September 2003, FML has maintained separate accounting records, bank accounts and Funds for policyholder and shareholder in terms of the Pension & Provident Funds Act Chapter 24:09 (Part IV, Section 16).
On 2 October 2020 the Commissioner wrote to the industry advising of the appointment of a consultant who would carry out an analysis of the insurance industry's separation of assets between policyholders' and shareholders' accounts. Since October 2020 First Mutual Life has been engaging with the Consultant to ensure compliance with the requirements of the Regulator.
Subsequent to the 2021 year-end, IPEC advised that First Mutual Life had not adhered to the agreed timelines and some of the submissions did not meet their standards; therefore a forensic investigation would be instituted in terms of section 67 of the Insurance Act. Management is co-operating with the Regulator in order to regularize the compliance matter.
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First Mutual Holdings Ltd. published this content on 29 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2022 07:21:03 UTC.
