Leading diversified financial services group; Britam 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. The firm has recorded a 4% rise in gross revenue and 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 occasioned by the effects of the Corona virus pandemic. Moses Cheruiyot writes.
Britam Holdings Plc has delivered a mixed performance for the financial year ended 31 December 2020 despite the Covid-19 pandemic.
Britam Holdings recorded 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.
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.
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 also increasingly prefer 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.”
The Board of Directors did not recommend the payment of a dividend for the year 2020.