Britam Holdings: HY2020 Earnings Note

The Group gross earned premiums and fund management fees was up 9 per cent; KShs. 1.13 billion from KShs. 12.93 billion for the period to 30 June 2019 to KShs. 14.06 billion for the period to 30 June 2020. The above increase is mainly attributable to the continued growth of the Group’s insurance revenue especially the international general insurance business which recorded an increase in gross earned premiums of 34 per cent, contributing 23 per cent of the group’s gross earned premiums and a profit of KShs. 575 million.

Britam Holdings Plc net earned premiums increased to KShs. 11.68 billion from KShs. 11.12 billion in the similar preceding period. Thus net earned premiums increased by 5 per cent or KShs. 0.56 billion.

Total income for the Group dipped by KShs. 4 billion or 24% to KShs. 12.94 billion as at end of June 2020. The dip in total income can be attributable to a 2,284% decline in fair value gains and losses which summed up to KShs. 3.22 billion for the period of which KShs. 3.1 billion was due to depressed stock market performance and KShs. 929 million was due to depressed property market which has been characterized by low occupancy levels and rental yields.

Total expenditure for the Group increased by 4% or KShs. 0.64 billion from KShs. 14.47 billion for the period to 30 June 2019 to KShs. 15.11 billion for the period to 30 June 2020. The major cause for the rise in total expenses was a 22 per cent rise in claim expenses to KShs. 8.11 billion from KShs. 6.63 billion in the preceding period.

Britam Holdings Plc reported a 195% decline in profit before tax from KShs. 2.47 billion for half year period ended 30 June 2019 to a loss before tax of KShs. 2.17 billion for half year period ended 30 June 2020.

The Group posted an after tax loss of KShs. 1.63 billion for the period ended 30 June 2020.The decline in net income can be attributable to a 24% decline in total income for the period and a 4 per cent increase in total expenditure. The effective tax rate declined 6 per cent from 31 per cent in June 2019 to 29 percent June 2020.

Total equity declined to KShs. 25.14 billion from KShs. 29.38 billion in the similar preceding period. The decline in equity is attributable to decline in retained earnings due to loss after tax made by the Group for the period.

Total assets for the group increased 3% for the 12-month period ended 30 June 2020. This can be attributed mainly to a 24 per cent surge or KShs. 1.87 billion increase in the group’s insurance assets to KShs. 9.85 billion from KShs. 7.97 billion in June 2019. Cash and cash equivalents also contributed substantially to the increase in total assets owned by Britam Holdings Plc for the period.

The poor performance of Britam Holdings is attributable to Covid 19 pandemic currently facing the whole world. Moving forward, Britam’s performance is anchored on successful discovery of a Covid-19 vaccine which will hopefully be available by December this year.