• Insurance service result moved from a US$2.87 million profit to a US$502,445 loss in HY26 as insurance service expenses climbed 57%
• Net investment income rose to US$7.40 million and became the principal buffer against weaker insurance performance
• Group profit fell 74% to US$1.57 million, although HY25 contained a US$3.9 million once off disposal gain

Harare- Fidelity Life Assurance’s core insurance operation moved into loss in the first half of 2026 as higher claims and a rising loss component pushed insurance service expenses above insurance revenue, leaving investment income carrying a greater share of group earnings.

Insurance contract revenue declined 4% to US$8.27 million from US$8.64 million a year earlier, while insurance service expenses increased 57% to US$8.68 million. The insurance service result consequently deteriorated from a US$2.87 million profit in HY25 to a US$502,445 loss in HY26. Management attributed the deterioration mainly to elevated claims and an increase in the loss component.

The direction of those two lines is more consequential than the group’s headline profit decline. Revenue weakened moderately while the cost of providing insurance services rose much faster, placing pressure on the economics of the insurance book itself. Restoring profitability therefore requires stronger new business conversion alongside tighter claims experience, pricing and product economics.

Investment returns absorbed much of that pressure. Net investment income reached US$7.40 million from US$6.51 million in the comparative period, allowing the combined insurance and investment result to remain positive at US$6.07 million despite the insurance service loss. Property fair value gains contributed US$2.69 million, while interest revenue reached US$1.23 million.

That earnings mix increases Fidelity’s dependence on asset performance when its insurance operations are under strain. Investment property alone stood at US$59.93 million at June, while financial assets measured at fair value through profit or loss were US$64.21 million. Together, the two portfolios accounted for close to 80% of the group’s US$155.79 million asset base.

The property portfolio also generated US$2.71 million in fair value gains during the half year, with Fidelity carrying investment property of almost US$60 million by June. The ability of those assets to continue providing earnings support becomes increasingly important while insurance service margins remain compressed.

The pressure was strongest in Zimbabwe, Fidelity’s largest market. The Zimbabwe operation generated US$5.88 million of insurance revenue, equivalent to about 71% of group insurance revenue, but recorded a US$717,035 insurance service loss after producing a US$1.69 million profit a year earlier. Insurance service expenses in Zimbabwe increased to US$6.53 million from US$4.23 million.

That deterioration places greater weight on management’s efforts to rebuild the top line. Fidelity said slower than expected conversion of new business contributed to the decline in insurance revenue, even as it continued launching products and widening distribution through mobile service booths, informal market channels and diaspora business. Zimbabwe remains the main revenue engine, making recovery in domestic insurance margins central to the group’s second half performance.

Reported group profit fell 74% to US$1.57 million from US$6 million in HY25, although the comparison is complicated by a US$3.9 million once off profit on the disposal of subsidiaries included in the prior period. Profit attributable to owners of the parent stood at US$2.18 million, with non-controlling interests absorbing a US$610,717 loss.

The underlying earnings comparison is considerably stronger than the headline 74% decline. Headline earnings attributable to ordinary shareholders increased to US$2.20 million from US$676,981, while headline earnings per share rose to US2.04 cents from US0.63 cents after removing the prior year disposal gain and other qualifying adjustments.

Fidelity therefore enters the second half with two separate earnings tasks. Management has to preserve returns from its substantial investment portfolio while repairing the profitability of the insurance operation that provides the group’s recurring franchise income.

The board’s decision to withhold an interim dividend reinforces that priority. Fidelity said capital would instead be directed towards rebuilding revenue and strengthening underwriting capacity, with the possibility of a more meaningful dividend at year end.

The second half will turn on whether new business conversion improves fast enough to lift insurance revenue ahead of claims and service costs. Investment income can continue cushioning earnings, though a sustained recovery in Fidelity’s operating quality requires the insurance service result to return to positive territory and reduce the burden being carried by property and financial assets.

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