Fidelity Life Assurance of Zimbabwe Limited used lessons from 2008 to make choices last year according to Group chairman Fungayi Ruwende the Audited Condensed Financial Results for the Year Ended 31 December 2019.
Zimbabwe experienced hyperinflation which resulted in the use of a multi-currency system in 2008.
“2019 was characterised by hyperinflation. Lessons from 2006-2008 loss of value era and our appreciation of the nature of the liabilities that we carry, influenced our choices to deliberate bulk up on inflation protection assets and scale down on monetary assets,” Ruwende says.
“Historical investment wisdom is reflected in the excellent investment performance of the Group which has helped to protect and grow value for our policyholders and shareholders.”
Fidelity Life chairman went on to say that the policy shifts that took place in 2019 had an impact on the business environment.
“One such policy change with significant impact was the introduction of the foreign currency interbank market that ended the Zimbabwe dollar’s 1:1 parity with the United States dollar,” Ruwende says.
“The multi-currency regime came to an end in June 2019 with the re-introduction of the Zimbabwe dollar as the sole legal tender in the country.”
“The hyperinflation which ensued resulted in businesses facing spiralling operating costs while revenues were negatively impacted by shrinking disposable incomes leading to decline in aggregate demand,” went on Ruwende.
The Chairman say Fidelity’s strategic choice to focus on inflation protection assets and core business resulted in positive results with the group recording profit after tax of ZWL$74.1 million on an inflation-adjusted basis for the year ended 31 December 2019.
“The inflation adjusted total revenue of ZWL$ 503.6 million increased by 52% from ZWL$332.0 million in the prior year,” Ruwende says.
“Revenue was boosted by fair value gains on investment properties which increased from ZWL$3.1 million in 2018 to ZWL$371.8 million in 2019.”
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