HARARE - Fidelity Life Assurance of Zimbabwe (Fidelity) plans to issue a $10 million bond aimed at the development of 5 300 houses in Harare.
The group’s chairman, Lawrence Tamayi, said they intended to raise an additional $5 million from the market after the initial $5 million bond floated early this year was oversubscribed.
“The funds raised will be deployed to the development of Fidelity Life Southview Park infrastructure,” he said.
As part of efforts to mobilise funds, Fidelity set up a wholly-owned special purpose vehicle, Athena Estates (Private) Limited. According to the company, the funds would be used for the installation of an 11 kilometre water pipe at a budget of $2,6 million and elevated water tanks with a capacity of 15 million litres at a cost of $2,3 million.
About $5 million will be spent on infrastructure development-related costs.
Fidelity has anchored its growth on the property development project and is confident it will contribute over $30 million in profits, if all the 5 300 houses are sold considering that liquidity challenges continue to affect the group’s traditional insurance business.
Meanwhile, the group’s gross written premium in the half year to June 2014 amounted to $7,9 million, up 15 percent from the $6,8 million earned in prior comparable period. Tamayi said an underwriting surplus of $3,8 million was achieved in the period under review up from $3 million attained in the six months ended June 30, 2013.
“Profit for the period amounted to $1,2 million down 43 percent over the corresponding period last year due to fair value losses on the investment portfolio, a result of depressed prices on the Zimbabwe Stock Exchange,” he said.
The group’s 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 joint venture — New Sudan Insurance Company — continues to show great potential to significantly contribute to group profitability. Currently, the focus is on establishing solid business structures, a reliable clientele base, internal control and information system,” said Tamayi.
He added the Fidelity would also continue to monitor the security and political developments in the troubled central African region.
The group did not declare any dividend in the period under review preferring to conserve cash for various projects being under taken. In June, Fidelity shareholders approved a 10 percent share buyback.
The group’s managing director, Simon Chapereka, said the shares would be purchased from the open market and would be converted into an employee share option scheme.
“(We) will give competent employees a sense of identity with the company,” he told shareholders at an annual general held meeting held then.
He added that the company was pursuing expansion plans in South Sudan. “We are waiting on the peace talks so that conflicting sides reach an agreement. We are currently still in Juba,” he said.