First Mutual Holdings Limited (First Mutual) has returned to profitability after a turbulent prior year, highlighting both the resilience of Zimbabwe’s financial services sector and the growing influence of currency dynamics on business performance.
The group reported a profit after tax of US$14.3 million for the year ended 31 December 2025, a marked turnaround from a US$26.3 million loss in 2024.
The recovery comes against a backdrop of persistent inflationary pressures, exchange rate volatility and the continued expansion of the informal economy, which now dominates national economic activity.
Insurance contract revenue rose ten percent to US$176.8 million, reflecting stronger uptake of policies and strategic adjustments to pricing and insured values.
Analysts note that this growth is closely tied to a broader shift in consumer behaviour, as clients increasingly favour US dollar-denominated products to preserve value and ensure certainty in claims.
That trend has effectively redrawn the contours of Zimbabwe’s insurance market.
According to the company’s disclosures, approximately 85 percent of revenue is now generated in US dollars, up from 75 percent in the previous year, highlighting a decisive move away from local currency exposure.
Beyond core insurance operations, the group’s diversified structure proved critical to stabilising earnings.
Rental income remained steady at US$8.5 million, supported by consistent occupancy levels, while investment performance improved significantly.
Fair value gains on investment property contributed to strengthening the balance sheet, with total assets rising to US$280.8 million, a sharp reversal from prior-year losses.
Yet the results also reflect deeper structural tensions within the economy.
The dominance of the informal sector, estimated to account for roughly three-quarters of activity, continues to constrain fiscal performance and limit the reach of formal financial services.
For insurers, this presents both a challenge and an opportunity: while informalisation reduces traditional market penetration, it also creates demand for flexible, value-preserving financial products.
First Mutual’s management appears to be positioning accordingly, emphasising digital innovation and product development tailored to evolving market realities.
At the same time, cost discipline remained evident, with administrative expenses tightly controlled even as the group invested in technology and service delivery.
The board declared US$1.4 million final dividend, bringing the total payout for the year to US$2.05 million, a signal of renewed confidence following the prior year’s losses.
Looking ahead, the group expressed cautious optimism, citing relatively stable macroeconomic conditions and ongoing policy efforts to formalise economic activity.
However, much will depend on whether authorities can sustain currency stability and incentivise broader participation in the formal sector. – TML