First Mutual triples profits in May YTD on strong investment returns

The strong performance reflects a significant improvement from the US$3.3 million recorded in the comparable period last year, underscoring the group’s strengthened earnings base, supported by robust financial markets performance and improved operational resilience across its insurance clusters.

The group’s net investment return surged to US$12.9 million from US$269,000 in the comparable period last year. This sharp uplift provided a major boost to profitability, offsetting higher claims and administrative pressures experienced during the reporting period. This sharp uplift provided a major boost to profitability, offsetting higher claims and administrative pressures experienced during the reporting period.

Insurance contract revenue grew 11% to US$77.1 million, driven by growth across life, health, reinsurance, and general insurance segments. However, this was partially offset by a rise in insurance service expenses, particularly higher incurred claims in fire, engineering, and health-related portfolios.

Shareholder revenue grew from 75,580 to 83,585, an 11% increase.

Speaking during the presentation of the trading update at the company’s annual general meeting, First Mutual Holdings Group Finance Director William Marere said the group recorded broad-based growth across its insurance clusters despite a challenging claims environment

“There was generally growth throughout in terms of insurance contract revenue across all clusters, whether life and health, reinsurance, and general insurance, which combined to give us an increase of about 11%,” said Marere.

He noted, however, that elevated claims weighed on the insurance service result during the period.

“We did see significantly higher claims incurred during the period, particularly in fire and engineering, as well as on the health side, which contributed to the increase in claims to about US$48.9 million,” he said.

The group’s net insurance and reinsurance performance improved 9% to US$11.4 million, supported by stronger reinsurance recoveries and commission income, which rose 46% to US$10.7 million.

On the balance sheet, total assets increased 7% to US$301.6 million, driven largely by growth in equity investments, insurance contract assets, and cash equivalents. Shareholders’ equity rose 11% to US$71.1 million, while policyholder funds increased in line with improved investment performance.

Equity investments climbed to US$56.1 million from US$42.9 million, reflecting the group’s increased exposure to financial markets and investment assets.

Cash and cash equivalents also strengthened, rising to US$21.7 million from US$19.5 million, supporting liquidity and operational flexibility.

Marere said the growth in the group’s financial position was underpinned by strong investment performance and disciplined balance sheet management.

“A significant part of the investment return was also the key driver of the results you are seeing, and this is reflected in the growth of our equity investments and overall asset base,” he said.

He added that insurance contract liabilities, largely policyholder funds in the life business, also grew in line with investment returns, rising from US$81.3 million to nearly US$89 million.

After adjusting for taxation, profit before tax rose sharply to US$10.9 million, compared to US$3.7 million in the prior period, reflecting broad-based gains across insurance and investment operations.

During the period, administration expenses increased to US$9.1 million, while net operating income rose to US$4.9 million from US$3.7 million, reflecting improved operational efficiency across segments.

The group’s total liabilities rose 6% to US$185.9 million, largely driven by insurance contract liabilities, while overall equity strengthened further.

Shareholders approved directors’ fees of US$312,922 and auditors’ fees of US$56,000 for the holding company.