First Mutual Life records investment loss
Oliver Kazunga, Senior Business Reporter
FIRST Mutual Life Holdings Limited has recorded an investment loss amounting to $392,8 million in the full year ended December 31, 2019 due to a decrease in value of equities listed on the stock exchange.
In a statement accompanying financial results for the period under review, the group indicated that its total assets also declined by two percent compared to December 31, 2018.
“The group had an investment loss of $392,8 million for the period under review compared to investment income of $207 million in 2018.
“The loss was driven by decline in value on ZSE (Zimbabwe Stock Exchange) listed equities as the market index grew at a slower rate than inflation,” said the group.
It attributed the decline in total assets to the loss of value on listed equities, the Zimbabwe dollar denominated bank balances and accounts receivables.
During the period under review, rental income amounted to $52,5 million and was ahead of prior year by three percent and 203 percent in historical terms.
The growth relative to the prior year is due to quarterly rental reviews and increases in occupancy rates in retail and residential properties.
The group’s properties and wealth management division, First Mutual Properties Limited, in the year ended December 31, 2019 registered a 12 percent decline in revenue to $58,1million.
The decrease was due to lower than inflation rental review rates. “However, there was an improvement in occupancy rates from 76,1 percent in 2018 to 85, 6 percent at the end of 2019.
“Independent investment property valuations as at December 31, 2019 resulted in significant increases in the portfolio value.”
First Mutual Wealth Management (Private) Limited also suffered a decline in investment fees during the year.
Investment fees decreased by 22 percent to $7,8 million in inflation adjusted terms mainly due to the below inflation performance of some components of funds under management such as quoted equities.
The ZSE Industrial index rose by 57 percent during 2019.
“During the year, the business made significant strides in attracting third-party funds and this trend is expected to continue,” said the group.
In the year ended December 31, 2019 the group said it was also exposed to foreign obligations relating to periods prior to 22 February 2019 ( legacy debts) when the US dollar and RTGS$ were segregated.
“The legacy debts amounting to US$1,9 million, which arose from retrocession premiums, regional claims and information technology costs were submitted to the Reserve Bank of Zimbabwe for approval.
“These liabilities have been recorded in the financial statements at the interbank rate,” it said.