Britam Holdings delivered a mixed performance for the financial year ended 31 December 2020 despite the Covid-19 pandemic.
Britam Holdings recorded a gross revenue of Shs 28.8 billion,
representing a 4 percent increase from Shs 27.7 billion reported in
the prior year ended 31 December 2019. This increase was mainly
supported by the continued revenue growth of the international
insurance business.
The international division continued to increase its contribution to
the Group’s performance accounting for 28 percent of the Group’s
gross earned premium and a profit of Shs 832 million up from Shs
38 million in 2019. Britam operates in six countries outside Kenya.
The Kenya General Insurance business turnaround strategy
delivered improved performance and the unit reported a profit
before tax of 374 million from a loss before tax of Shs 306 million in
2019, a 222 percent improvement.
The Group continued to be resilient in its cash generating ability,
outperforming its peers in delivering positive operating cash flows
of Shs 7.6 billion, and significantly growing its investments in fixed
income return assets. The total assets for the Group have closed at
Shs 137 billion, a 9 percent growth from 2019 with assets under
management closing at Shs 250 billion.
The Group’s total underlying operating costs also declined by 6.4
percent as a result of prudent cost control measures including
rationalizing non-essential costs.
The Life Assurance business continued to underwrite profitable
new business with embedded value remaining resilient despite the
tough operating environment. The embedded value as of 31
December 2020 was Shs 16.3 billion, representing a marginal drop
in annualized return of 0.60 percent even as returns on the business
listed equities and properties significantly dropped.
However, Britam Holdings has reported a loss before tax of Shs 9.7
billion in the year 2020 compared to a profit before tax of Shs 4.6
billion in 2019.
The tough operating environment experienced in the year under
review led to significant fair valuation losses from our investment
in equities, impairments on some of our property investments as
demand remained subdued in the commercial and residential
housing sector.
Poor listed equities performance contributed a fair value loss of Shs
2.3 billion and property impairments of Shs 2 billion. The
unfavorable operating environment adversely impacted our
investment in associate – HF Group contributing to the Group
results, a share of loss at Shs 823 million and a reduction in the
value of this investment by Shs 603 million.
The results were further depressed by a provision for investment
losses of Shs 5.2 billion being the level of support to be offered to
Britam Wealth Management Fund LLP, a Fund managed by Britam
Asset Managers which is a fully owned subsidiary of Britam
Holdings Plc.
Britam’s Group Managing Director, Mr. Tavaziva Madzinga said the
company’s growth potential remains strong and expects Britam to
return to profitability in 2021.
“The Group’s fundamentals remain strong and with a new
transformative strategy being implemented, coupled with an
improved operating environment, the Group’s performance is
looking very positive for 2021. We remain financially strong with a
stable solvency capital position,” said Mr. Madzinga.
Britam Holdings recently injected Shs 1 billion tier 2 capital as part
of a broader strategy to power growth and cement HF Group’s full-
service banking strategy. Mr. Madzinga said the capital injection is a
clear indication of the vote of confidence that the Group has in its
various business units.
Response to Covid-19
To mitigate the impact of Covid-19 across operations, the Group
implemented alternative ways of working, with the bulk of
employees working remotely, while maintaining service levels to
clients and advisers.
Backed by its investment in IT, Britam also accelerated its digital
programmes to make sure customers could continue to access its
products and services.
Business Strategy
Britam is at the tail-end of developing a new strategy with a focus
on excellence for customers, innovation and business
transformation.
Britam’s 2021-25 Strategic Plan seeks to enhance customer
experience by becoming more customer centric; expand its
customer base to drive growth; and improve the efficiency with
which Britam runs its business to ensure better returns.
Additionally, it will gear the organisation for enhanced digital
innovation in its solutions and product development.
As part of its new strategy, Britam will capitalize on its investments
in technology and the new organizational structure to achieve
operational efficiencies and prudent cost management. The
company is also reviewing its investment profile by relooking at
asset allocation with a focus on optimization of returns.
Mr. Madzinga said the company will also leverage strategic
partnerships to drive scale and grow its customer base through
developing targeted and customized products.
Outlook
Mr. Madzinga said the economic disruptions brought about by
Covid-19 continue to drive uncertainty and it may take time to
contain or mitigate the spread of the virus or address its impact on
individuals, businesses and the economy.
Mr. Madzinga said the pandemic has however accelerated
opportunities in its markets as customers are increasingly focused
on their health, wellbeing and financial security. Customers are also
increasingly preferring virtual interactions. He said Covid-19
situation has also been a powerful accelerant to the company’s
innovation efforts.
“The pandemic has propelled Britam digital strategy which has
enabled us put customer needs at the centre of everything we do.
We will deploy deep customer insights and data analytics to better
understand their needs and provide relevant solutions,” said Mr.
Madzinga.
He added: “Britam is well-placed to tap emerging opportunities with
its underlying financial strength and a diversified business model.”
Dividend
The Board of Directors did not recommend the payment of a
dividend for the year 2020.
Britam is a leading diversified financial services group and is listed
on the Nairobi Securities Exchange. The group has presence in
seven Africa countries in Kenya, Uganda, Tanzania, Rwanda, South
Sudan, Mozambique and Malawi.
Britam offers a wide range of financial products and services which
include: Asset Management, Life Assurance, Retirement Planning,
General Insurance, Health Insurance, Banking and Property.
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