Published: 05 July 2025

First Mutual Life Assurance Company (FML) says it is continuing to engage with the Insurance and Pensions Commission (IPEC) to bring closure to matters arising from a forensic audit conducted in 2022. The audit, prompted by an asset separation exercise, identified compliance breaches that could have adversely affected policyholders.

The audit revealed that FML, a subsidiary of First Mutual Holdings (FMHL), had failed to adequately separate assets between policyholders and shareholders. This raised concerns that policyholder funds may have been misallocated, potentially resulting in financial losses.

Group chairman Amos Manzai, in a statement accompanying the financial results for the year ended December 31, 2024, confirmed that a Corrective Order issued by IPEC was later withdrawn after a settlement agreement was reached.

"This agreement incorporated steps to resolve outstanding issues. This included the appointment of independent experts to consider reviewing issues in contention," said Manzai. "These independent experts have since submitted their findings, which FML has accepted."

He added that IPEC subsequently requested FML to resubmit some of the information that had already been provided, along with additional documentation. This, he said, had been complied with as part of the ongoing resolution process.

The asset separation initiative by IPEC was introduced to enforce legal compliance and safeguard policyholders against the diversion of funds meant for their benefit to shareholders. The exercise sought to identify any misappropriated or misallocated assets, ensure their proper reallocation, and promote better governance across the insurance and pensions sector.

According to IPEC, several insurance companies exhibited notable non-compliance with asset separation laws, prompting the need for the in-depth forensic investigations.

Despite the challenges, FML reported steady growth in its core operations for the year under review. The company recorded insurance contract revenue (ICR) of US$10.5 million, a 24 percent increase from the previous year. This growth, Manzai noted, was largely driven by client migration from local currency-denominated policies to US dollar-based policies in the Group Life Assurance segment. This trend reflected the broader shift towards USD-based salaries and compensation packages in Zimbabwe.

However, FML's net profit for the period declined to US$0.8 million, down 26 percent from the prior year. The decline was attributed to exchange losses incurred on local currency-denominated monetary assets, particularly during the first and third quarters of the year when the local currency experienced significant depreciation.

FML reaffirmed its commitment to good governance, transparency, and regulatory compliance, adding that it remained focused on ensuring policyholder interests were protected and that it would continue working with IPEC to finalise the audit-related matters.
- The Herald