OMZL bets on real assets under the hyperinflationary environment

OMZL bets on real assets under the hyperinflationary environment
Published: 23 September 2019
Insurance giant Old Mutual Zimbabwe released its financial results for the half year ended 30 June 2019. The headline figure was the 671% growth in profit before tax to $509.2 million while operating profit rose by 287% to $132.9 million.
Gross Written Premiums (GWPs) increased by 29% to $132.6 million with the group noting improvements in both life and short term insurance business due to client retention and new business.
The banking business saw an increase in profit with growth from 195% to $61.1 million from $20.7 million in HY2018, driven by property fair value gains, exchange rate gains and positive net interest income.
Commenting on the operating environment, Group CEO Jonas Mushosho admitted the difficulty with which his organisation is faced with concerning preserving value," In a hyper-inflationary environment it is never possible to totally protect or cushion customers from the loss of value, but we will seek to minimize that loss of value."
In line with that the management team emphasized on investing in real assets to protect the policyholder and shareholder value in the inflationary environment. This stance comes as worries grow of another round of value loss reminiscent of the 2007-2008 financial crisis that hit Zimbabwe. During that period a high level of trust and goodwill was lost between Old Mutual and its customers as investor and policyholder values were wiped out.
To support the strategy Old Mutual acquired 27 hectares of land in Ngezi as well as two pieces of land in Victoria Falls. The Ngezi land will eventually be developed into a major office park as well as a hospital.
Speaking on the groups plans for the Victoria Falls Land Group Chief Investment Officer Marjorie Mayida said, "We acquired two pieces of land in Vic Falls, our target is to construct tourism and hospitality assets in there. We are still going through various concepts that are in line with other developments that are happening in Vic Falls before we can start on the project."
Meanwhile, the groups alternative investments portfolio expanded from $108.2 million end of year 2018 to $199.6 million in HY2019. Mayida revealed that 40% of the investments were in infrastructure with the rest shared between the consumer and manufacturing sectors. Within the infrastructure sector, investments in the Solar energy generation space were the primary focus.
The group declared a dividend of ZWL8.66 cents per share payable on the 14th of October 2019.
- finx
Tags: OldMutual,


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