Fidelity Life Assurance of Zimbabwe: Reginald Chihota on Latest Developments and Future Goals

Interview with Reginald Chihota, Managing Director at Fidelity Life Assurance of Zimbabwe

Could you provide an overview of Fidelity Life Assurance of Zimbabwe and its evolution?

Fidelity Life originates from Legal and General (Pvt) Ltd, established in the UK around 1896. In 1936, a branch was opened in Bulawayo, followed by another in Salisbury, now Harare, in 1937. Legal and General (Pvt) Ltd maintained its name until 1988 when a local consortium acquired it, rebranding it as Fidelity Life. While our core focus has always been life and pension services, we view ourselves more as problem solvers within the insurance industry. Our aim is to support individuals throughout their life journey. This led to the establishment of subsidiary companies to cater to various needs. For instance, we offer medical insurance to address healthcare concerns, educational policies to support clients’ educational aspirations, and micro-lending services to facilitate financial endeavors such as buying a home or getting married. Additionally, we provide asset management services for those seeking to build their wealth. As individuals progress in their careers, we assist with pension funds. Moreover, we offer funeral services alongside our life and pension offerings. In terms of regulation, we adhere to guidelines set by IPEC for insurance and the Zimbabwe Exchange, as we are a listed company. Our subsidiaries, such as the micro-lending division, comply with regulations set by the Central Bank of Zimbabwe. Beyond Zimbabwe, we operate in Malawi through a subsidiary called Vanguard Life Assurance. Historically, we have been active in the region, including Angola, Zambia, South Sudan, and Mozambique, mainly through management agreements or partnerships. These subsidiaries are part of a larger conglomerate known as ZHL, which encompasses companies like Credsure for short-term insurance, Emeritus for reinsurance, and ZPI for property management.

What competitive edge do you possess, and how does it differentiate you from others in the same sector?

One of our key competitive advantages lies in our agility, a trait not commonly shared among our competitors. Fidelity Life can swiftly respond to market demands. We have capitalized on this agility by introducing innovative investment products tailored to local needs. For instance, our investment product is uniquely tied to residential assets, resonating with Zimbabweans’ strong cultural emphasis on homeownership and education. Moreover, recognizing the cultural significance of cattle ownership, we are expanding into biological assets as part of our investment offerings. This keen understanding of local values enables us to stay ahead in the market.

Furthermore, our comprehensive suite of services, all available under one roof, provides unparalleled convenience for our clients. Whether it is medical insurance, funeral services, or education policies, clients can access everything they need from Fidelity Life, streamlining their financial management. Additionally, our moderate size allows us to maintain a sharp focus on client satisfaction. We prioritize direct CEO involvement in client interactions, ensuring that client needs are not only heard but also addressed promptly and effectively. This commitment to responsiveness and accessibility has become synonymous with the Fidelity Life brand, further solidifying our competitive edge in the market.

Could you provide a brief overview of your flagship products and services offered to your clients? Additionally, what types of individuals do you typically serve?

Post the 2008 turmoil, while most players focused on retail, commercial, and industrial properties, we took a unique approach by prioritizing the residential sector. Our largest development to date, South View, comprising 5800 units, primarily targeted individuals from the informal sector. These clients demonstrated remarkable commitment to meeting their obligations. Hence, we actively engage with informal sector communities, offering tailored micro-insurance products to meet their needs.

Could you provide some insight into your pension offerings and the strategies you employ to foster confidence in your clients and the Zimbabwean people?

In Zimbabwe’s pension industry, approximately 90% of funds are defined contribution pension funds, emphasizing the significance of investment returns as policyholders bear the investment risk. Preserving and growing contributions are paramount for pension fund strength and eventual payouts. We prioritize real assets like property, which we believe appreciate over time, alongside traditional stocks and money market investments within regulatory guidelines. Additionally, we actively engage in alternative investments, seeking impactful opportunities aligned with our environmental, social, and governance (ESG) goals. This approach allows us to generate returns while making socially responsible investments.

Could you provide insights into the types of investments available, giving us an idea of what is on offer?

We are currently involved in low-cost housing development, such as the South View community project comprising 12,800 units. We are pioneering innovative approaches. For instance, we are in the process of implementing plans to pipe gas directly to these units, a departure from the conventional practice where households individually procure gas. This initiative aims to enhance convenience and affordability for residents. Additionally, we are undertaking ambitious plans to deploy a large-scale microgrid solar system. Not only does this endeavor contribute to the renewable energy conversation, but it also addresses the pressing energy deficit prevalent in Zimbabwe and other southern African countries. By supplementing government efforts, we strive to meet the energy requirements of our communities while promoting sustainability and resilience in our infrastructure development.

Could you tell us about any ongoing projects Fidelity is currently involved in?

We have a few projects underway, notably the Victoria Falls hospital and hotel developments. These projects aim to provide essential amenities, including residential options. One aspect we are particularly excited about is the Victoria Falls airport’s recent upgrade to an international status, enabling it to accommodate a wider range of aircraft. However, certain large aircraft types are still unable to fly into Victoria Falls due to regulatory requirements mandating a minimum number of hospital beds in the vicinity for emergency situations. The hospital we are constructing will fulfill this requirement and is designed not only as a standard medical facility but also to tap into health tourism. We are equipping it with state-of-the-art facilities and personnel to offer world-class treatment, akin to what one might find in India. Our goal is for Victoria Falls to become a hub for medical tourism, serving not only Zimbabwe but also the broader regional market. Additionally, accompanying patients and visitors will have accommodation options in the hotels we are developing.

How open are you to investors, considering you are a listed company? If you had a message for potential investors, what would it be?

We are open to two groups of potential investors. Firstly, we have recently registered a Real Estate Investment Trust (REIT), which has obtained prescribed asset status from regulators. We are seeking to raise $60 million, split evenly between equity and debt, to fuel development in this area. We believe Zimbabwe has the potential to generate above-average returns in US dollar terms, mitigating currency risks for investors. Secondly, we are reaching out to Zimbabweans in the diaspora, particularly those in the UK, US, South Africa, New Zealand, and Australia. We offer opportunities for them to invest in retirement homes in Zimbabwe or purchase services such as medical insurance for their loved ones. We are actively working on delivering a comprehensive message to both investor groups and welcome any platform to share our plans once finalized.

Could you provide more details and elaborate on your recently registered Real Estate Investment Trust (REIT)?

The Victoria Falls development, along with other ongoing and future projects, is part of this trust. By investing in it, individuals essentially purchase units in the trust. Our aim is to eventually list it on the Victoria Falls Stock Exchange, a USD-based exchange. For potential investors seeking more information, my team can provide detailed descriptions and likely returns. What I can confidently affirm is that investments in Zimbabwe offer significant potential for returns.

What are your aspirations for Fidelity Life Assurance of Zimbabwe in the next three to five years?

There are two main objectives we would like to achieve. Firstly, we aim to restore the lost value of people’s savings through strategic and aggressive investments, particularly in light of inflation and potential currency reforms. Secondly, we hope to reignite the culture of long-term savings and make it relevant again in society. Currently, there is a lack of interest in pension funds due to dismal returns experienced by pensioners. It is crucial to collaborate with stakeholders, including regulators, the government, and employers, to rebuild trust in our products. Mobilizing domestic savings through pension funds is essential for national prosperity, and we believe Fidelity can play a significant role in achieving this goal.

What motivates you and drives your philosophy, particularly in the realm of insurance and your career aspirations?

Well, it is quite amusing how I stumbled into insurance accidentally back in 1991, thinking it would be temporary. However, here I am in 2024, still deeply engaged in it. What truly drives me is the creation of value and making a meaningful impact. I am passionate about initiatives that improve people’s lives, such as embracing ESG principles and promoting renewable energy. I firmly believe in aligning the interests of shareholders with those of other stakeholders, including policyholders, communities, and governments. It is not about choosing one over the other; rather, I advocate for win-win situations where everyone benefits. Continuous learning and adaptation are also integral to my philosophy, both personally and organizationally. I believe in fostering a blend of talented youth and experienced individuals for balanced excellence. Strategic alliances and collaboration are key in achieving mutual success, which I strongly advocate for.

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