Britam Holdings has reported a whopping loss before tax of Sh9.7 billion in the 2020 financial year, a huge loss compared to the profit before tax Sh4.6 billion it raked in in 2019.
The tough times was due to the adverse effects of Covid-19 pandemic leading to significant fair valuation losses from its investment in equities, impairments on some of its property investments due to reduced demand in the commercial and residential housing sector.
According to Britam, poor listed equities performance contributed a fair value loss of Sh2.3 billion and property losses of Sh2 billion.
The harsh operating environment badly affected its investment in associate – HF Group, resulting in a share of loss of Sh823 million and a slash in the value of the investment by Sh603 million.
Britam said the results were further depressed by a provision for investment losses of Sh5.2 billion in support for Britam Wealth Management Fund LLP, a Fund managed by Britam Asset Managers and is a fully owned subsidiary of Britam Holdings Plc.
However, Britam’s Group MD Tavaziva Madzinga remained optimistic saying the firm’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 Madzinga.
Britam, at the same time, recorded a gross revenue of Sh28.8 billion, which represented a 4 per cent growth from Sh27.7 billion reported in the year ended 31 December 2019 backed by the continued revenue growth of the international insurance business.
The international division continued to grow its contribution to the Group’s performance and accounted for 28 percent of the Group’s gross earned premium and a profit of Sh832 million up from Sh38 million in 2019.
The performance of the Kenya General Insurance business experienced a profit before tax of Sh374 million from a loss before tax of Sh306 million in 2019, a 222 per cent improvement.
The Group’s operating cash flows stood at Sh7.6 billion as the company that operates in six countries outside Kenya significantly improved its investments in fixed income return assets.
Britam’s total assets closed at Sh137 billion, a 9 per cent growth from 2019, with assets under management closing at Sh250 billion.
However, Britam’s total underlying operating costs declined by 6.4 per cent due to prudent cost control measures, including rationalisation of its non-essential costs.
The company’s Life Assurance business continued to underwrite profitable new business with embedded value remaining resilient despite last year’s tough operating environment.
The embedded value as of December 31, 2020 was Sh16.3 billion, a significant drop in annual return of 0.60 percent with returns on listed equities and properties also dropping.
Britam Holdings recently injected Sh1 billion tier 2 capital as a part of its wider strategy to enhance growth and cement Housing finance (HF) Group’s full-service banking strategy.