As the world ushered in the New Year in 2021, an inevitable but weighty change occurred in corporate Kenya.
Benson Wairegi – the longest serving chief executive of a Nairobi Securities Exchange (NSE)-listed firm – retired after 40 years in Britam Group’s corner office. The transition, even though anticipated, also carried with it the risk of organisational disruption on the back of a ravaging Covid-19 pandemic whose economic havoc on livelihoods and businesses is still rippling.
Wairegi’s replacement, Tavaziva Madzinga (a Zimbabwean), quit after just 10 months in office and headed for South African insurer Santam, raising eyebrows.
His short stint had unsettled the blue-chip firm amid a radical restructuring for a leaner Britam, which saw middle and top-level managers exit.
“It’s fair to say that the organisation had gone through some trauma,” current Chief Executive Tom Gitogo tells Financial Standard. Last September, Gitogo returned to the firm where he’d once been a finance director, taking over from Charles Njuguna, who had been serving in an acting capacity.
“My first assignment was to stabilise the organisation, which I’ve done. The ship was a bit unstable for understandable reasons.”
Nine months in, Mr Gitogo lists his top priority as assuring the market and staff. Empathetic and a keen listener, Mr Gitogo held numerous town halls with staff and placed communication at the core of his leadership.
He has spent over 30 years in various roles in the financial services industry in Africa and Europe. He was responsible for CIC Insurance Group operations in four African countries, including, Kenya, Uganda, South Sudan, and Malawi and also served as the chief executive of Pan Africa Life (now Sanlam Insurance), which are both listed at the NSE.
“The industry also knows me, which offers stability too,” notes the civil engineering graduate from the University of Nairobi, whose journey to the top began as a management trainee for consultancy giant PwC.
Britam is in its third year of implementing its five-year strategy, which Mr Gitogo says is delivering, with the firm announcing Sh2.9 billion pre-tax profit for the year ended December 2022.
To sustain the growth momentum, he said the diversified financial services firm would remain true to its strategy anchored on customer centricity, stabilisation and growth of investment returns, and improving cost efficiencies.
“The environment has changed, but the pillars of the strategy haven’t moved. There are some nuances we may need to bring to the strategy to incorporate the dynamism of the environment. For example, the dollar was between Sh118 and Sh119 when we first started the strategy, it’s now between Sh140 and Sh150,” the CEO points out.
He acknowledges that the growth trajectory of some of their business lines such as asset management and life insurance have also been impacted by the rising cost of living.
The weakening shilling against the dollar has also hit their general insurance business, where some claims depend on imports such as drugs for the medical insurance business or spare parts when it comes to motor insurance.
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However, even after the improvement in financial performance, Britam shareholders will go for the third consecutive year go without any dividend.
“There are some investments that we need to make for a significant uplift of our profitability and future-proofing our business so that our payment of dividends is consistent,” he explains, adding that shareholders should expect dividends starting next year. Britam is the largest life insurer in Kenya by premium income and profitability. Mr Gitogo adds that they’ll continue pushing the life business even as they eye other growth drivers such as managing pensions.
“We have a lot of headroom there [life business]. There’s been some interesting development in the pension industry. We are looking to absorb a lot of the business that will spin off from NSSF’s (National Social Security Fund) Tier 2 contributions,” he says.
Britam is among the early underwriters that have gotten approval from the Retirement and Benefits Authority (RBA) to manage Tier 2 NSSF contributions from employers who opt out of the State pension fund.
Private pension schemes such as Britam have adequate governance structures, transparency, and easy accessibility of funds and offer double-digit returns, making them attractive to employers. For the year ended December 2022, the regional general insurance businesses continued to support Britam’s revenue and profitability and contributed 23 per cent of the group’s total gross earned premiums. The over Sh158 billion asset-rich Britam, which has operations in Kenya, Uganda, Rwanda, Tanzania, South Sudan, Mozambique and Malawi, is further looking to strengthen its presence in the region.
“Other growth will come from doing more with the infrastructure that we have in the seven countries; we are also looking to expand our footprint seriously, for example, countries such as the Democratic Republic of Congo (DRC),” explains Mr Gitogo, pointing to the miniature flags of the seven markets Britam operates in that dot his office.
The mineral-rich DRC, which recently become the seventh member of the East African Community (EAC), is the largest country in sub-Saharan Africa, offering huge untapped opportunities for access to one of the world’s last economic frontiers. Kenyan businesses led by large lenders such as Equity and KCB have been leading moves to capture this market tipped to increase the EAC’s gross domestic product (GDP) by 24 per cent from Sh27 trillion to Sh33.6 trillion.
For the Kenyan general insurance business, motor and medical have been the key drivers of growth. However, the two have high loss-making ratios owing to factors such as price undercutting and fraud.
Mr Gitogo notes that technology has a huge role to play in streamlining general insurance in the country.
Britam recently piloted telematics, a technology that tracks drivers’ data and behaviour, enabling the firm to better segment and price its policies. “This allows us to distinguish how much premium we charge on what drivers, rather than one blanket case. We believe it will be a strong differentiator in the market and is a necessary input to making the motor business profitable in the country and the region,” explains Mr Gitogo.
The industry also developed the Integrated Motor Insurance Data System which is a database that aggregates vehicle insurance data from all insurance firms with the aim of mitigating fraud.
Britam also has a lab where it sandboxes insure-tech ideas. “As happens in any economy, you’ll have people with ideas but not necessarily the money to bring those ideas to fruition. We are working with some of these start-ups that have an idea and no working capital,” says Mr Gitogo.
The partnership will be through equity ownerships or joint ventures depending on the potential. So far, Britam has partnered with two leading insure-techs - Inclusivity and M-tek - in using technology to digitise and improve customer journeys, integrate with other partners, and facilitate seamless payments and administration.
Mr Gitogo, who refers to himself as “village proper,” credits his humble roots for his calm and collected leadership style.