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The introduction of the multi currency system in February 2009 brought stability in the economy with notable positive results on inflation. The 2009 monetary and fiscal policies managed to reduce inflation to a negative 7.7% and created a conducive environment which resulted in companies increasing capacity utilization to average between 30 and 40%. We expect continual improvement in the Socio economic and political environment, leading to enhanced growth in Gross Domestic Product in 2010. The Pensions and Insurance sector will benefit from improved industrial activity and disposable incomes.

FINANCIAL PERFORMANCE REVIEW

Group Results

The Group financial performance during the period under review was commendable, given the prevailing operating environment. Total revenue for the year was $3.9 million, while profit after tax was $2.065 million.

During the same period, Investment income’s contribution to total income was 20% from the 95% in the previous year. This was largely a result of decline in values of mainly equity investments, in view of the liquidity challenges and low economic activity.

The Group successfully undertook a capital raising exercise during the second half of 2009 to recapitalize the business. Your company will use the stronger capital base to take advantage of the expected growth in the economy going forward.

FIDELITY LIFE ASSURANCE OF ZIMBABWE

Total premium income for the year was $1.473 million, while claims during the same period were at $130 000. Investments income stood at $1.482 million. This was due to a deliberate non crystallization strategy on equities positions to take advantage of the upside potential to be triggered by economic recovery. We are hopeful that our strategy on investments will still deliver value going forward.

Operating and administration costs were $1.260 million. Overally the company recorded a profit after tax for the year of $2.137 million.

Individual Life Division

Premium income was $239,462 reflecting the harsh economic realities characterized by low household disposable incomes. Product innovation remains a priority area going into the future.

Employee Benefits Division

Premium income for the period ended 31 December 2009 was $1.233 million. Most companies have reverted to remunerating employees via the payroll albeit on low salaries and this has helped in terms of premium income inflows. Going forward, the company will be aggressive on acquiring new business while at the same time ensuring business presently on board is retained.

Vanguard Life Assurance

This subsidiary, based in Malawi, posted a profit before tax of $813,478 for the year ended 31 December 2009.

Fidelity Life Assurance Zambia

This subsidiary, based in Zambia, posted a loss before tax of $597,394 for the year ended 31 December 2009. There was a fraud involving senior management. The extent of the loss to date is about USD$100 000 and the investigation is still on going to establish the full extent of the loss. The

company’s trading license was subsequently suspended in June 2009 hence the loss due to fixed overheads without income being generated.

The company’s operation has been temporarily suspended pending the resolution of the license suspension.

Fidelity Life Asset Management

The asset management subsidiary posted a loss before tax of $41,693 for the year ended 31 December 2009. The company was largely affected by prevailing liquidity challenges and low economic activity which affected institutional, corporate entities and individual investors alike.

Zimbabwe Actuarial Consultants

Profit before tax for the year ended 31 December 2009 amounted to $5,316. The subsidiary continues to compete for business with other players in the industry, both locally and regionally.

Fidelity Funeral Services

The company recorded a marginal loss of $113,954 for the period under review. We expect the company to increase its presence in the market in 2010 and compete effectively with other players in the sector. Contribution to Group performance is expected to improve going forward.

Dividend

Due to the need to strengthen the company’s balance sheet and underwriting capacity, your Directors recommend that no dividend be declared for the year.

Outlook

General economic improvement is expected across all sectors of the economy and this is likely to boost disposable incomes of workers. Your company is positive about the future in view of the political dispensation ushered in by the signing of the Global Political Agreement and already improving operating environment.

Appreciation

I take this opportunity to express my deep appreciation to our clients and stakeholders for their continued support. I would also like to commend my fellow directors, management and staff for the efforts made during the past twelve months.

S. Tembo

Board Chairman