FBC Reinsurance Limited says the outbreak of the Covid-19 pandemic will adversely affect business and may shift its plans as the company adjusts to comply with the restrictions imposed by the pandemic.
Company secretary, Tichaona Mabeza, said the potential negative impacts include but not limited to impairment of premium receivables, impairment of property and equipment, fair value of financial assets and other investments as well as capacity to meet foreign obligations.
To help deal with the uncertainties posed by the pandemic, FBC Reinsurance will among other measures, suspend unnecessary capital expenditure, review operating expenses, focusing on digital delivery channels.
“However, the Covid-19 pandemic is complex and rapidly evolving, the company’s plans may change.
‘‘At this point we cannot reasonably estimate the duration and severity of this pandemic, which could have a continued material impact on our businesses, results of operations, financial position and cash flows,” said Mabeza in a statement accompanying results for the year to December
While the company’s e-commerce channels have not been affected in terms of delivering services to customers, volume of transactions and revenues are expected to be disrupted due to lockdown, which is limiting business activity.
Already, the economic challenges obtaining in the country coupled with Covid-19 induced problems have had a negative impact on business.
The insurance sector in general has not been spared from the dynamics prevailing in the economy, compounded by changing regulatory environment resulting in weak demand for both short term and life insurance products.
Volatility in the foreign exchange market continued to weigh down on capacity of the industry to meet contractual obligations as well as reasonable policyholder and find member expectations thereby undermining confidence in the sector.
As a result, during the 2019 financial year, FBC Reinsurance loss widened to $43 million from a loss of $21 million recorded in the previous year.
Total assets closed the year at $198 million down from $200 million which was indicative of the loss of value due to prevailing hyperinflationary environment.
Chairman Simon Chikumbu said the performance was mainly due to hyperinflationary operating economic environment low liquidity, low productivity, low employment levels and foreign currency shortages.
The same challenges also affected FBC Insurance Company Limited which recorded a loss before tax of $26,9 million and loss after tax of $23,6 million from a loss after tax of $12 million in the prior year.
Acting chairman John Mushayavanhu said the firm, however, managed to reduce the impact of inflation on its traditional business through robust investment strategies that yielded increased investment income.
“As inflationary pressures continued to negatively affect premium revenues, attention shifted to hedging via a robust investment strategy,” he said.–herald.cl.zw