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Fidelity Life Assurance chief executive Mr Simon Chapereka stands beside a site map of South View in 2012

Happiness Zengeni Business Editor
FIDELITY Life Assurance has anchored its growth on Southview Park, a property development project, confident it will deliver a $30 million windfall if all the 5 974 stands are sold.  Southview Park, which is located in south-west Harare was launched in 2012 on land purchased from CFI Holdings’ Crest Breeders for US$3,3 million.

Chief executive Mr Simon Chapereka told analysts yesterday that the group’s major thrust for the year is the development of the Southview stands.

For this year alone, if 3 500 stands are sold, the group will have a total $32,37 million as proceeds but the total income would get to US$34 million after accounting for $4,25 million interest income and taking out $2,62 million in insurance.

Automatically, the group will offer a loan protection policy and free funeral cover to all who purchase on instalments.

Mr Chapereka said the cost of developing the stands would be about $11,3 million while the group expects a net profit of $21,15 million.
If this is achieved and profitability remains at current levels then the group’s bottom-line would hit the $30 million mark.

In the year to December 31, 2013, Fidelity reported a net profit of $2,53 million, a 38 percent decrease from prior period.

Total revenue was $24,6 million, 9,5 percent lower than 2012 mainly due to the slowdown in sales at Fidelity Life Park in Manresa. The group had decided to hold on to the stands as a strategic land bank for future use.

“In addition to this, performance was affected by the depreciation of the Malawian kwacha against the US dollar (by close to 33 percent) and this had drastically reduced the value of income from the Malawi business.”

Vanguard Malawi had premium income of $2,8 million and profit after tax of $850 000.

“Had it not been for the 33 percent depreciation, the group would have registered a higher profit.”

Overall, Mr Chapereka said the slowdown in economic activity affected all the sectors of the economy in general and the insurance sector was no different.

Uptake of products was lower while remittances of premiums were negatively affected by the liquidity challenges in the economy.
Policyholders had surrendered their policies due to low disposable incomes and company closures.

“The growing informalisation of the economy requires insurance companies to be innovative in coming up with products that appeal to the informal market,” Mr Chapereka.

It is for this reason that the group is banking on property development to diversify its revenue streams.

According to the plan, the group will next year sell 2 474 stands and expects to make a profit of $23,22 million while between 2016-2022 the bottom-line will be at $12,79 million. This will bring the total to $57,17 million.

Mr Chapereka said Government had granted a prescribed asset status “and we will issue a $5 million bond and use the proceeds to develop Southview Park”.

He said to date a subdivision permit has been issued by the City Authorities, a topographical survey performed and completed as well as an environmental impact assessment.

Seventy percent of required equipment had been purchased and some has now been received. Mr Chapereka said over 2 000 stands have been pre-sold and $4,5 million raised from deposits and instalments. In traditional markets (Life assurance business), the group will focus on cost reduction, consolidation of operations and market share maintenance.