Britam pays out dividend despite recording Sh1b loss

Britam Holdings Ltd Group Managing Director Benson Wairegi (left) with Group Finance and Strategy Director Gladys Karuri when the company announced its 2015 full-year financial results.? Britam has proposed to pay Sh580 million as dividends despite a paper loss it reported for the past financial year. (PHOTO: COURTESY)

Britam has proposed to pay Sh580 million as dividends despite a paper loss it reported for the past financial year.

The regional provider of insurance and other financial services yesterday announced that it had maintained its dividend payout, after reporting a Sh1 billion in net losses linked to value depreciation of its listed assets. Such assets include bonds and shares of other public companies which Britam is holding for the long-term.

Group Managing Director Benson Wairegi said that the business grew despite the loss caused by the fair value write-downs on its investments in the Nairobi Securities Exchange. “The fundamentals of the business remain strong,” said Dr Wairegi, adding that the fair loss of asset in 2015 was Sh2.8 billion against Sh4.1 billion in 2014. Total revenues were up by 38 per cent to Sh20.3 billion

He projects that 2016 would be a much better year for the recovery of asset valuations including shares held in Equity Bank and Housing Finance Group – both are listed at the NSE. Market valuation for all the companies listed at the NSE fell by more than a fifth, partly due to investor jitters about the volatility of the Kenyan currency and a tight monetary policy.

A high interest rate stance was adopted by the Central Bank of Kenya to attract foreign currency inflows that would ultimately support the value of the domestic currency. But when rates rise, the value of debt instruments including corporate and government bonds falls – translating to paper losses for investors who wish to keep the assets to maturity.

Insurers are among the biggest institutional investors at the NSE, whose downturn in 2015 depressed the earnings for various firms. The insurance sector accounts for about 95 per cent of revenue for Britam, which grew its geographical presence to seven countries after the acquisition of Real Insurance.