NAIROBI, KENYA, MAR 23 — Insurance group Britam’s net profit for the year ended December 31 2017 plunged to Ksh527 million from Ksh2.5 billion recorded the previous year.
The decline in profit is attributed to a “one-off change” that positively impacted 2016 earnings by Ksh5.2 billion.
“In compliance with provisions of the Insurance Act as amended in the Finance Act 2015 and as required by the Insurance Regulatory Authority (IRA) , we in 2016 changed the valuation method for life business long term liabilities to Gross Premium (GPV) method from the previous applied Net Premium Valuation(NPV),” the firm said on Thursday evening.
The dip comes despite growth in the group’s gross earned premiums for 2017 which grew 14.8 per cent to close at Ksh23.3 billion up from Ksh20.3 billion the previous year. Net earned premiums were Ksh20.3 billion, a 16.7 per cent growth from Ksh17.4 billion recorded in 2016.
Cash generated from operating activities during the year also increased to Ksh7.9 billion compared to Ksh5 billion.
Regional businesses contributed revenue of Ksh2.7 billion accounting for 13 per cent. This is higher than Ksh2.4 billion in 2016.
The insurer however handled higher claims than 2016 with net benefits and claims totaling Ksh12.5 billion last year, compared to Ksh5.0 billion a year earlier.
Total expenses also almost doubled, growing 45.2 per cent to Ksh27.0 billion from Ksh18.6 billion.
This undermined the firm’s total income of Ksh27.8 billion, which was a strong performance compared to Ksh22.3 billion in 2016, boosted by a strong performance of the underwriter’s investments in equities.
The Nairobi Securities Exchange listed insurer had in January this year issued a profit warning saying its earnings would decline by at least 25 per cent, which it pegged on the absence of the one-time valuation changes.
READ:https://www.exchange.co.tz/britam-joins-nse-listed-companies-list-of-profit-warnings/
The group asset base however increased 18 per cent to Ksh90 billion from Ksh83.7 billion in 2016.
“The shareholders’ funds have increased by 27 per cent on the back of a strong performance and issuance of new shares to International Finance Corporation (IFC) during the year,” the firm added.
The board has recommended payment of a dividend of 35 cents per share amounting to Ksh756.9 million. This is up from Kh30 cents per share in 2016 where the firm paid out Ksh581.5 million in dividend.
Future growth
The underwriter which offers a wide range of financial products and services in insurance, asset management, banking and property, is counting on its “Go for Gold” Strategy to grow its business.
This includes the launch of a 24-hour customer contact centre supported by a new Customer Relations Management (CRM) system which went live this year.
Other initiatives include the launch of various digital portal, mobile based products and streamlining of back office operations.
“We have made significant progress against our key strategic objectives as outlined in our 2016-2020 strategy,” the firm said in a statement.
Britam has offices in Kenya, Uganda, Rwanda, South Sudan and presence in Mozambique, Malawi and Tanzania.
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