Britam Holdings #ticker:BRIT reported a record net loss of Sh9.1 billion in the year ended December when its asset management division underperformed.
The insurer had made a net profit of Sh3.5 billion a year earlier. The performance saw the company suspend dividend payouts, having made a distribution of Sh630.8 million or Sh0.25 per share the year before.
“The results were further depressed by a provision for investment losses of Sh5.2 billion in Wealth Fund Management Fund LLP, a fund managed by Britam Asset Managers which is a fully owned subsidiary of Britam Holdings Plc,” the Nairobi Securities Exchange-listed firm said in a statement.
“The holdings company is committed to supporting the fund to fulfil its obligations as they fall due through oversight of the fund’s operations and the agreed recovery plan."
The company did not give details of what went wrong at the asset management unit. It, however, indicates that it is willing to absorb some of the losses to protect clients who invested in the fund.
It was not immediately clear how much money the fund was managing and the assets in which it is invested.
The disclosure of the losses at the fund came after the insurer overhauled its executive and board, including the investment committee, giving it an opportunity to look at issues that may have been glossed over in the past.
The company appointed Zimbabwean Tavaziva Madzinga as its chief executive effective February 1, replacing Benson Wairegi who had been with the insurer for 40 years.
The company also replaced its former chairman, Andrew Hollas, on the same day with Mohamed Said Karama on a temporary basis.
Besides the troubles at the fund, Britam also took a hit from a drop in the value of its listed equities and property investments.
"Of this loss, Sh2.3 billion related to a fair valuation loss due to poor equities performance and Sh2 billion related to property impairments," the insurer said.
The insurer plans to sell its 48.2 percent stake in HF #ticker:HFCK to one of the country’s big banks as part of a review of its investment portfolio.
Britam said that its core insurance business was resilient in the review period.
"However, operating results were better than 2019. Our gross earned premiums (GEP) and fund management fees was up 4.2 percent to Sh28.8 billion from Sh27.7 billion," the insurer said.
"This is attributed to the growth of our insurance revenues especially the international general insurance business which recorded an increase in GEP of 50 percent, contributing 28 per cent of the group’s GEP and a profit before tax of Sh832 million up from Sh38 million in 2019."
Britam recently eliminated nine top executive positions or nearly half of its management team as the new CEO led a shake-up of the top deck of the Nairobi bourse-listed firm.