HARARE – First Mutual Life Assurance Company (FML) finds itself embroiled in a legal dispute with the Insurance and Pensions Commission (IPEC) following a contentious “Corrective Order” demanding substantial payments to policyholders.
The order, stemming from a forensic investigation initiated by IPEC, has thrown the company’s future into uncertainty and sent shockwaves through the financial sector.
Based on findings by BDO Chartered Accountants, the order directs FML’s shareholders to pay “significant sums” in both Zimbabwe dollars and US dollars to compensate for “perceived actual and potential losses.”
FML, however, vehemently rejects the BDO report and the IPEC order, claiming their submissions were overlooked and key issues remain unresolved.
Disagreements surround interpretations of facts, accounting standards, legal and actuarial principles, and even currency conversion methods. To challenge these discrepancies, FML is seeking independent expert opinions.
Both FML and its parent company, First Mutual Holdings Limited (FMHL), said they remain committed to finding an amicable solution. However, in a move that casts a shadow over the negotiation process, FML has filed an application with the High Court to review the Corrective Order.
While stressing their dedication to serving and protecting policyholders, the companies acknowledge the potential impact on stakeholders and advise shareholders to exercise caution when dealing with the company’s securities.
“FML respectfully disagrees with the findings in the BDO report and in the IPEC Corrective Order and believes its submissions were not properly considered.
“Interpretations of fact, accounting standards, legal and actuarial principles, as well as currency conversion issues are in dispute. FML is seeking input from independent third-party professionals in a bid to resolve the areas of disagreement.
“Accordingly, the Boards of both FML and FMHL are exploring all avenues to find a way forward.
“Meanwhile, in order to protect FML’s legal rights, an application for review of the Corrective Order has been filed with the High Court.
“Notwithstanding the institution of legal proceedings, which has become unavoidable to safeguard FML’s rights, both FML and FMHL will continue to work with the regulator and with the parent Ministry to resolve the issues,” the company said in a statement.
Investors now face an anxious wait as the legal battle unfolds. The High Court’s ruling on the review application and the ongoing negotiations with regulators will be crucial in determining the company’s future and restoring confidence in the market.
This comes at a time when CBZ Holdings is in the process of merging its operations with those of First Mutual Holdings Limited (FMHL) after the banking group acquired a 36 percent stake in one of Zimbabwe’s leading financial services companies.
