FML Plunges To US$5m Loss

FIRST Mutual Holdings (FML) has plunged into a huge loss after its insurance business incurred huge claims during the year to December 31, 2014.

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FML chief executive officer, Douglas Hoto

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The group posted a loss of US$5 million during the full year to December 2014, against a profit of US$6 million in 2013.

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Although this could ordinarily have represented an unprecedented diminution of value, total assets however grew by four percent due to acquisitions and growth in investments.

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The group’s total expenditure increased by US$10,9 million to US$114,7 million during the reporting period.
\nFML chief executive officer, Douglas Hoto, an actuarial scientist who bounced back to the group amid high expectations from shareholders, said the group was on course to restore profitability after completion of a rationalisation exercise and an actuarial adjustment transformation.

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The group said the increase in total expenditure for the year to December 2014 was partially due to the upturn in total claims which increased by 41 percent to US$70 million compared to US$49,8 million the previous year.
\nThere was a higher claim ratio in the health business, increased retrenchment and retirement withdrawals in the life company amounting to US$50,7 million.

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Gross premium written at US$115,3 million was 14 percent above the prior year figure of US$101,1 million on the back of improved performance from the health and life assurance businesses.

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The group had a negative investment income of US$3,8 million in 2014 compared to investment gains of US$6,5 million in 2013. This was in line with movements in the stock market.

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“The group incurred staff rationalisation costs of US$2,5 million as it aligned its operating structure with the environment,” said Hoto.

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The group’s total assets grew by four percent from US$205,2 million in 2013 to US$213,3 million last year.

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“This growth is mainly attributable to an increase in investment properties following the acquisition of the remainder of the lot 57 Mount Pleasant, Harare for a purchase price of US$9,6 million as well as the growth in held to maturity investments and cash and cash equivalents,” he said.

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Rental income decreased by four percent from US$7,8 million in 2013 to US$7,5 million last year, reflecting the current challenges faced by tenants and the resultant decline in rentals per square metre.

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The average rental per square metre decreased from US$8,28 in 2013 to US$7,57 in the current year. The occupancy rate for the period was 80 percent compared to 76 percent in the prior year.

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In view of the loss incurred for the year, FML directors recommended that no dividend should be declared.