eBusiness Weekly
Nelson Gahadza
Fidelity Life Assurance (FLA) says it has registered a Real Estate Investment Trust (REIT) to spearhead value creation and infrastructure development through public and private partnerships.
REITs are vehicles that own, operate, or finance income-generating real estate, modelled after mutual funds.
In 2019, the Government gazetted a statute paving the way for the registration of various investment schemes with the Securities and Exchange Commission of Zimbabwe, such as Exchange Traded Funds as well as REITs (Statutory Instrument 240 of 2019).
Regulations for such instruments were subsequently published in the Finance Act No. 2 of 2020.
Fidelity’s managing director, Reginald Chihota, said value creation, growth and preservation of policyholder and shareholder investments remained at the center of all operations.
“This broad objective influenced all investment decisions in capital, money and real estate markets,” he said in the Group’s 2022 annual report.
He said that in support of the product offering and rollout, the Group pursued an aggressive digital strategy to ensure maximum leveraging of the best-suited technological systems and platforms.
Chihota said a combination of these investments coupled with a robust product offering such as ‘Vaka Yako” saw the business grow in real terms, fuelled by organic growth and significant on boarding of new clients.
“Diligent updating of products and services enabled the Group to remain relevant and served well in buttressing continued business growth,” he said.
The market already has the Tigere REIT listed on the Zimbabwe Stock Exchange (ZSE).
According to Finance and Economic Development Minister Mthuli Ncube, REITS are motivated, among other factors, by the need for instruments that allow the pension funds to improve their liquidity.
REITs make it possible for individual investors to earn dividends from real estate investments without having to buy, manage, or finance any properties themselves.
It comes as the pensions and insurance industries have had to invest most of their assets in property and stocks which are relatively illiquid, to hedge against high inflation.
Chihota said Fidelity remains focused on executing the business model of resilience and growth centred on providing adaptive insurance, health and financial services solutions driven by customers needs in the obtaining operating environment.
He said the focus on innovative products is intended to maximise long-term value creation for the market.
“The diverse and disruptive products introduced to carefully selected market segments during the year have certainly begun to bear fruit and this is a testament to the Group’s drive towards innovation,” he said.
Chihota indicated the Group remains committed to playing its part in Government national programmes such as the National Development Strategy 1 (NDS1), which focuses on creating an upper middle-income society by 2030 through achieving sustainable development and products and services that are aligned to the growth trajectory.
“The Group will continue to seek both private and public partnerships for housing and infrastructure development projects.
“We remain optimistic about future business prospects given the Group’s strong fundamentals and the opportunities embedded in being part of the Zimre Holdings (ZHL) ecosystem,” he said.
During the year under review, the growth in net premium written from $982.1 million recorded in the prior year to $3245.1 million was above the inflation rate, which stood at 243.76 percent as of December 31, 2022.
Chihota said growth is premised on regular reviews of recurring premiums, product modifications, new market segments, and leaning towards generating USD revenue to keep up with the volatile economic environment.
He said the gains on investment property show the reflective nature of this asset class in response to the macroeconomic sphere.
Chihota said that in the context of the current volatile operating environment, the Fidelity Life brand continued to show strong resilience, underpinned by the exploitation of niche markets in the economy.
He said the identification of these niche markets and the rollout of innovative products contributed to the creation and preservation of policyholder and shareholder value, which was cemented by investment in real assets.
