Fidelity Life Assurance’s profit for the year ended December 31, 2020 plummeted 84% to ZWL$54.1m from ZWL$329.8m recorded during the same period in 2019 due to a huge slump in revenue.
The subdued performance was caused by the weakening of disposable incomes which do not allow the majority of the population to subscribe to the company’s products.
In a statement accompanying the financial results, Fidelity chairman Fungayi Ruwende said the depreciation of the currency in the first half of 2020 was exacerbated by the impact of Covid-19 which ravaged the group and the economy at large.
“Inflation adjusted group total revenue decreased by 47% to ZWL$1,15bn recorded in the current year from ZWL$2.18bn recorded in prior year.
“The decrease in total revenue was as a result of a slump in investment income which decreased by 88%. Investment income is mainly driven by fair value gains on investment properties which are driven by the movement in exchange rate,” Ruwende said.
He said the group posted positive results recording profit before tax of ZWL$69.2m on an inflation adjusted basis for the year ended December 31 2020, despite the negative impact of Covid-19 during the year under review.
The subsidiary in Malawi continues to provide diversification relief to the group against the unstable currency movements in Zimbabwe.
The group recorded major savings on the Southview water pipeline works which resulted in project development costs decreasing by 82% to ZWL$79.7m current year from ZWL$488.9m prior year.
However, operating expenses decreased by a much lower 31% to ZWL$252.4m recorded in the current year from ZWL$366m in 2019.
The group’s total assets increased by 19% in real terms to ZWL$5,5bn as at 31 December 2020 from ZWL$4,6bn as at 31 December 2019.
Ruwende said the asset growth was driven by investment property and equity investments which account for 70% of the group’s total assets.