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Business Reporter
Fidelity Life Assurance has applied for a new $10 million bond limit after its initiation floatation was oversubscribed by $5 million.  This follows setting up of a special purpose vehicle to raise $5 million for development of its low cost residential property, Southview Park, 19 kilometres along Harare Masvingo road.Chairman Mr Lawrence Tamayi said in a statement in the group’s interim financial results that Fidelity was developing 5 300 stands, in addition to other amenities needed for the properties.

“A bond for $5 million, with prescribed asset status was oversubscribed by $5 million and we have applied for the (new bond) limit to be raised to $10 million. The funds raised (from the bond) will be deployed to the development of the Fidelity Life Southview Park infrastructure,” Mr Tamayi said.

According to the company’s prospectus, the initial $5 million targeted under the $5 million bond was meant to fund installation of an 11km 500mm bulk water pipe at a cost of $2 675 million.

It was also earmarked for elevated water tanks with a capacity of 15 million litres at budget $2 325 million, a City of Harare pre-condition before development of the park started.

The two projects would satisfy land development permit conditions and this was expected to enable commencement of land servicing on the low cost housing scheme.

These developments are expected to accelerate the rate of stand pre-sales, which would fund further development work..

Fidelity said it had earned $700 000 single premium income without any claims against the revenue from the project.

The group believes the Southview Park will contribute significantly to future income.

In terms of group performance, Fidelity said revenue during the interim period increased by 15 percent to $7,9 million over the same period last year, driven by the life assurance unit.

Fidelity Life Assurance leveraged group performance with gross premium of $6,5 million, giving underwriting surplus of $2,6 million.

Mr Tamayi said that the group achieved underwriting surplus of $3,8 million during the interim period, against $3 million in the same comparative period ended June 30 2013.

Profit during the period under review amounted to $1,2 million, which was 43 percent down on the same period last year.

The sharp decline in profits was due to fair value losses on the investment portfolio due to depressed prices on the ZSE.

The Malawi subsidiary, Vanguard Life Assurance, posted gross premium income of $1,4 million and underwriting surplus of $800 000. The medical aid unit managed $160 000 surplus. The Sudan joint venture continues to show potential.

Focus has been placed on enhancing strong business structures, reliable clientele, internal controls and information systems.