Britam to pay dividends in the face of Sh1 billion loss

Mr Benson Wairegi, Britam Managing Director. PHOTO | FILE 

By MICHAEL OMONDI, momondi@ke.nationmedia.com

In Summary

• The insurance firm posted an unrealised loss of Sh2.8 billion on the value of its financial assets compared with an unrealized gain of Sh4.1 billion in the same period last year.

Britam Holdings has maintained its dividend payout despite announcing a loss of Sh1 billion for the year ended December 2015 linked to lower valuations of the companies it has invested in at the Nairobi Securities Exchange.

Britam, which has insurance, asset management and property development businesses, posted a profit of Sh2.4 billion a year earlier.

The firm will pay an unchanged dividend of Sh0.30 a share, translating to a payout of Sh581.5 million.

"The downturn in performance of the securities market has negatively impacted on the fair value of the financial assets hence resulting in a loss," said Benson Wairegi, Britam’s Group Managing Director.

“The business fundamentals of the group remain very strong given the more than half a billion shillings will share with our shareholders as dividends. We on course in the implementation of our growth and diversification strategy which focuses on increased local and regional presence, innovative product offering and property development,” he added.

Britam posted an unrealised loss of Sh2.8 billion on the value of its financial assets - shares it holds in other companies - compared with an unrealized gain of Sh4.1 billion in the same period last year.

The benchmark NSE 20-Share Index lost 21.9 per cent last year following a steep drop in stock prices that saw investor wealth at the bourse as measured by market capitalisation shrink by Sh251 billion.

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This lower valuations have hurt Kenya insurers with all listed insurance firms but two announcing a profit alert, highlighting the impact the NSE’s poor performance has had on insurance firms.

READ: Liberty alert leaves 2 NSE insurers in profit growth zone

Real estate has become one of the fastest growing sectors over the last decade, fuelled by a burgeoning middle class.

Britam wants to go big in the booming property sector and reduce its reliance on insurance business, which accounts for most of its earnings, and the equities market.