BRITAM HOLDINGS DELIVER MIXED PERFORMANCE

Britam Holdings recorded mixed performance despite covid-19 pandemic. PHOTO /PATRICK MWAURA

Britam Holdings  delivered a mixed performance for the financial year ended 31 December 2020 despite the Covid-19 pandemic.

By Patrick Mwaura

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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