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Michael Tome 

Business Reporter

FIRST Mutual Holdings Limited (FMHL) says it recorded notable growth in United States dollar denominated business in the first half of 2022 as stakeholders moved to hedge against insurance value erosion.

Douglas Hoto, FMHL group chief executive officer, in the statement accompanying the 2022 half-year financials, said more inclination towards US dollar products was driven by the need to evade the local currency loss of value in the period under review.

This comes as the Zimbabwe dollar shed 70, 23 percent of its value against the greenback in the first half of 2022.

Nicoz Diamond Insurance Limited, which falls under FMHL’s short-term insurance cluster, saw a notable positive movement in US dollar denominated premiums, which contributed 63 percent of total premium income.

On the other hand, the life and health cluster consisting of First Mutual Life Assurance and First Mutual Health also witnessed growth in foreign currency denominated products. First Mutual Life Assurance saw improved revenue earnings in the retail segment as it initiated more underwriting business in foreign currency coupled with enhancement of its Zimbabwean dollar denominated funeral product covers.

“The growth was due to organic growth as well as an increased preference for US dollar denominated policies as these policies provide a hedge against insurance value erosion,” said Mr Hoto.

Consequently, Nicoz Diamond Insurance’s gross premium written (GPW) grew by 27 percent to $6 billion in inflation-adjusted terms while it recorded a claims ratio growth of 42 percent from the prior year attributable mainly to higher claims incidences as Covid-19 lockdown regulations continued to recede.

Another division under the short-term insurance cluster, Diamond Seguros gross premium written improved 47 percent in inflation-adjusted terms to $464 million resulting in improved broker business following the recapitalisation of the business in the last quarter of 2021.

Also, First mutual life assurance’s GPW surged 51 percent to $3 billion in inflation adjusted terms while its claims ratio surged to 25 percent from 20 percent in the prior year due to benefits that are based on upgraded policies.

First Mutual Health GPW saw a 40 percent growth to $8 billion in inflation adjusted terms given the revision of contribution rates in response to health service costs that increased in real terms.

The segment’s claims ratio in the period under review declined to 77, 1 percent from 84 percent in the comparable period given lower claim incidences recorded in the period.

First Mutual Health membership slightly decreased to 116 516 in June 2022 from 116 916 members in June 2021 despite the challenging economic environment which to date continues to threaten employee’s capacity to pay contributions.