Fidelity release a depressed set of results

Published: 12 September 2013

Fidelity Life Assurance realised a depressed set of results, underwriting surplus was 33% down from $3.3m to $2.2m.

Profit from operations dipped 21% from $3.3m to $2.6m mainly because land that was earmarked for development has not yet been revalued in 2013 whereas in 2012 such land was revalued as it was classified as investment property. Premium income increased by 3% from $6.7m to $6.9m.

On the Balance sheet, loans and borrowings amounted to $8.1m up from $7.8m.

However there was notable improvement in the ROE and ROA. The net cash flow from operating activities amounted to $0.6m up from negative $7.1m whilst the closing cash and cash equivalents for the period of $7.3m was boosted by cash flows from financing activities of $2.2m.

The mainstay unit, Fidelity life, recorded an improved net premium income of $4.2m (2012: $3.6m) while the Non Insurance subsidiaries recorded a $0.3m profit.

Vanguard's premium income was down from $1.7m to $1.3m. Fidelity assurance’s premium was unchanged from the comparable period at $1.2m.

Fidelity's performance was adversely impacted by the slow down in the economy's growth, as group performance tracks developments in the wider economy. Imara Edwards Securities analyst Kudakwashe Mundowozi thinks that any thawing in the liquidity situation will provide a boost for the businesses.

"In the meantime, development projects on the group's land banks will provide a boost for the businesses. However the cancellation of policies under the individual life division is worrisome, given that the group is still in a recovery mode and is still off its peak levels," said Mundowozi in a note to shareholders.

"Increasing debtors on group balance sheet is a red flag given the tight liquidity conditions," noted Mundowozi. Imara has downgraded the stock to sell.
- imara stockbrokers

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