First Mutual Holdings suffers US$27 million loss

Financial services group First Mutual Holdings Limited (FMHL) has reported a significant after-tax loss of US$27.11 million for the financial year ended December 31, 2024, reversing the previous year's robust profit of US$58.68 million. The downturn has been attributed primarily to distortions in investment property valuations driven by transitional currency reporting guidelines.

In a statement accompanying the group's financial results, FMHL chairperson Amos Manzai explained that the loss stemmed largely from a US$54 million fair value loss on investment property, later offset slightly to US$50.5 million due to new property additions.

"The group incurred a loss after tax of US$27.1 million from a profit of US$58.7 million in the prior period. The contrasting performance for the two periods is due to major distortions on investment property emanating from compliance with functional currency transitional guidelines as required by IAS 21," said Manzai.

He noted that in 2023, the company's investment property was valued in Zimbabwean dollars (ZWL) by independent property valuers who did not base their assessments on official exchange rates, citing their limited relevance in actual property transactions. When these ZWL values were converted to US dollars on January 1, 2024, they produced an inflated opening balance of US$182 million—well above the final USD valuation of US$134 million as of December 31, 2024.

This revaluation process, coupled with declining insurance revenues, heavily impacted the group's financial performance.

FMHL recorded a decrease in insurance contract revenue to US$156.21 million, down from US$183.44 million in the previous year. Segment performance showed life assurance generating US$12.31 million (2023: US$11.9 million), health insurance contributing US$61.51 million (2023: US$55.1 million), while property and casualty insurance dropped sharply to US$82.39 million from US$116.43 million in 2023.

Insurance service expenses, however, declined to US$112.44 million from a previous US$158.86 million, slightly easing pressure on the bottom line.

Group CEO Douglas Hoto highlighted the continued shift towards foreign currency transactions, reflecting broader macroeconomic trends in Zimbabwe.
"During the year under review, the proportion of Group revenue in foreign currency increased from 74% to 84%, indicating client preference for insurance covers and other products in foreign currency," said Hoto.

Total assets for the group fell by nearly 11%, to US$256.8 million, largely as a result of fewer gains from investment property.

Despite the difficult operating environment, Hoto reaffirmed FMHL's commitment to innovation, client engagement, and product relevance.
"The group's solid financial position, diversified revenue streams as well as the focus on growing the contribution of regional assets is expected to contribute towards sustainable growth and value creation for our stakeholders," he said.

He added that product development and investments in technology remain central to FMHL's strategy to adapt to Zimbabwe's ever-changing economic landscape.

The group also revealed plans to partner with policymakers and government through mutually beneficial collaborations aimed at supporting national development while protecting shareholder and policyholder interests.