Britam Holdings' net profit for the half-year ended June 2025 decreased by 13.6 percent to Sh1.74 billion, as increased claims payouts and declining returns on investments put pressure on the business.
The insurer’s financial results published on Friday showed net earnings had retreated from the Sh2.04 billion it had posted in the preceding similar period last year.
While the insurer continued to win new business, taking insurance revenue to Sh19.69 billion from Sh17.8 billion, claims and reinsurance expenses surged, cutting its net insurance service result by 39 percent to Sh1.28 billion.
Net investment income grew by 30.2 percent to Sh17.28 billion from Sh13.27 billion. However, this was nowhere near the performance in the preceding half-year, where net investment income rose 2.5 times or 150 percent to boost the bottom line.
A declining yield curve drove the decline in net investment income. Insurers invest premiums in Treasury Bills, Treasury Bonds, and other fixed income assets, and, therefore, when returns on such investments are falling, it results in slowed growth in investment income.
Kenya’s insurers are facing headwinds in their government paper and fixed deposit investments as returns decline, marking a contrast to the previous year when higher investment income lifted their earnings.
Many underwriters, especially those offering long-term insurance, have been increasing their investments in Treasury bills and Treasury bonds over time, with the asset class now accounting for over 70 percent of their investment portfolios.
However, insurers are now under pressure this year in an environment of falling returns on government paper, coupled with a decline in returns on fixed deposits.
Britam’s increased spending on settling claims and reinsuring the business, added to the slowed pace of growth in investment income, means that the business will be counting on the second half of the year if it is to post full-year profit growth.
Despite the headwinds, Britam Holdings managing director Tom Gitogo said the half-year performance pointed to resilience given the double-digit growth in insurance revenues and investment income.
“We are pleased with the double-digit growth in insurance revenues and investment income, which highlights the strength of our core business. Our regional businesses continue to contribute positively to the overall performance in line with our diversification strategy,” said Mr Gitogo.
“Looking ahead, we remain confident that as interest rates stabilize and economic conditions improve, Britam is well-positioned to deliver a stronger performance in the second half of the year.”
The half-year profit helped Britam cut accumulated losses to Sh924.9 million from December’s Sh1.79 billion. Britam first fell into an accumulated loss position in 2020 when the record Sh9.1 billion loss wiped out all the Sh1.77 billion retained earnings it had in 2019.
