FMHL eyes regional expansion

STAFF WRITER

First Mutual Holdings Limited (FMHL), one of Zimbabwe’s largest listed diversified financial services groups, is eyeing an aggressive regional expansion strategy as it moves to reposition itself beyond domestic markets and build a more resilient, geographically diversified earnings base.

The group, which already has a presence in Botswana and Malawi, is now actively scouting additional markets across Southern Africa as it seeks to spread risk, strengthen its balance sheet resilience, and unlock new revenue streams in an increasingly competitive and digitising financial services landscape.

Against a backdrop of currency volatility, rising reinsurance costs and uneven economic recovery in key markets, FMHL’s expansion drive signals a strategic shift towards scale, diversification and cross-border partnerships as central pillars of its next phase of growth.

Speaking at an analyst briefing yesterday, chief executive officer Douglas Hoto said the group remained confident in regional economic prospects and was intensifying investment across its portfolio to extract long-term value for shareholders.

“We would like to deepen the group’s footprint in the region through targeted expansion and strategic partnerships, enhancing revenue generation and earnings contribution,” Hoto said.

He said FMHL’s growth model was increasingly anchored on geographic diversification, technology adoption and disciplined capital allocation—factors he described as critical in navigating a rapidly evolving financial services environment.

“Through technology, the group will seek to develop growth opportunities that provide innovative solutions that will be key to responding to market shifts and deliver lasting stakeholder value,” he said.

Analysts say FMHL’s regional ambitions reflect a broader shift among Southern African financial institutions that are increasingly looking beyond domestic markets to sustain growth, as local economies face structural constraints and heightened competition compresses margins.

For insurers and diversified financial groups in particular, expansion into new markets is increasingly being viewed not just as an opportunity, but as a hedge against country-specific shocks.

FMHL’s strategy is also unfolding at a time when the financial services sector is undergoing rapid transformation driven by digital platforms, changing consumer behaviour and rising regulatory demands.

Despite these pressures, the group reported a resilient performance for the year, underpinned by steady underwriting results, investment gains and improved operational efficiency across its business units.

Insurance contract revenue rose 10% to US$176.8m, supported by growth across key product lines and sustained customer retention. However, insurance service results eased slightly to US$27.6m from US$28m in the prior year, reflecting adjustments linked to pipeline premiums in the reinsurance cluster.

Hoto said the group’s insurance operations remained fundamentally sound, supported by disciplined underwriting and enhanced claims management frameworks.

“While reinsurance costs remained significant, they continued to play an important role in protecting the group’s balance sheet and maintaining risk exposure within acceptable limits,” he said.

FMHL’s non-insurance businesses continued to play a growing stabilising role, with rental income increasing 3%, while health services and asset management divisions delivered steady contributions.

“Our diversified income streams continued to provide stability and growth,” Hoto said, adding that these units were central to building a more balanced financial services group.

Investment performance improved significantly during the year, driven by fair value gains on investment properties and stronger equity market returns.

The group recorded gains of US$3.9m on investment properties, reversing prior-year losses linked to functional currency adjustments under International Accounting Standard 21 and exchange rate volatility.

FMHL said it maintained strict cost discipline while selectively investing in digital transformation initiatives aimed at modernising operations and improving customer experience.

“Administrative expenses were carefully controlled, while targeted strategic investments were made to support digital transformation,” Hoto said.

As a result, the group returned to profitability, posting a profit after tax of US$14.3m compared to a loss of US$26.2m in 2024.

FMHL also declared a dividend, signalling renewed confidence in earnings stability and reinforcing its turnaround trajectory after a volatile reporting period.