FML Asset Separation Forensic Audit Reaches Climax

By Alois Vinga

HARARE: A forensic audit into questionable asset separation by First Mutual Life (FML) has reached a crescendo, with the government moving quickly to appoint investigators into the case.

FML would have defied the law on the separation of insurance and pension activities.

The company reportedly submitted an unsatisfactory report during an asset separation exercise.

It is the second largest life insurance company in Zimbabwe by market share, specializing in pension, medical insurance, micro-insurance and other long-term financial security products.

In an update this week, FML President Amos Manzai said investigations had officially begun.

“The Regulator has issued a letter dated 27th July 2022 advising that the Ministry of Finance has appointed BDO Chartered Accountants Zimbabwe, as forensic investigator in accordance with the provisions of the Insurance Act (Chapter 24:07)”, did he declare.

“The letter further stated that the investigation should be completed within four months of the start date. The investigation officially began on August 26, 2022.”

Accordingly, the audit review of the group financial statements is incomplete pending the finalization of the forensic investigation into FML.

“In the meantime, the board, in consultation with the ZSE, has decided to release the financial information in the form of a preliminary report,” Manzai said.

At the same time, during the reporting period, FML experienced significant growth in short-term US dollar-denominated insurance coverage as part of technology investment plans to improve service delivery.

For the period ending June 30, 2022, Group Chief Executive Douglas Hoto said there was a marked shift towards foreign currency denominated policies.

“There has been a visible shift towards US dollar insurance coverage among short-term insurance companies and likewise there has been an increase in demand for US dollar investment products and loans. for asset management and microfinance firms respectively,” he said.

At Nicoz Diamond Insurance Limited, gross written premiums increased 27% to $6 billion on an inflation-adjusted basis and 195% to $4 billion on a historical cost basis, attributable to organic growth as well as an increased preference for policies denominated in US dollars.

The Group’s total assets appreciated by 44% from December 31, 2021 to June 30, 2022 in inflation-adjusted terms and by 215% in historical cost terms.

The growth both in inflation-adjusted terms and in historical cost terms is mainly attributable to the fair value adjustment of investment properties, listed shares and an increase in cash reserves which increased by 33 % in inflation-adjusted terms and 192% in terms of historical cost to $9 billion. .