Britam vets executives afresh amid layoff of 138 staff

Insurance group Britam Holdings #ticker:BRIT is moving to implement the restructuring of its top executive team, with individuals being assessed for redeployment to other roles or exit under a voluntary early retirement (VER) plan.

Sources familiar with the matter said the long-serving executives started attending the interviews yesterday.

According to leaked documents, the Nairobi Securities Exchange-listed firm has targeted 10 positions in the upcoming shake-up.

These include the principal executive director, chief of staff, group chief operating officer, corporate affairs director, marketing director, commercial director, legal and company secretarial.

Others are the chief executive roles for the insurer’s life, general and asset management businesses.

Elimination of some executive roles is part of a plan to shed an estimated 138 jobs by end of May at a cost of up to Sh700 million, with a consultant hired by the company saying there are too many managers and reporting layers.

“The business appears to be top-heavy, driving operational costs even higher,” the insurer said in a recent statement.

Britam’s corporate restructure appears to be one of the most significant in recent years after the largest one undertaken by KCB Group that led to the scrapping of some 15 executive directors’ posts.

This is the second wave of layoffs at the insurer which spent Sh664 million to let go of 110 employees in 2018.

Britam said the new job cuts had been necessitated by the company’s financial and share price underperformance relative to its peers, adding that its current staff costs remain bloated.

The insurer added that remuneration accounts for half of its operating costs.

The company said it could cut 10 to 15 percent of its total workforce which stood at 923 in December 2019, according to the latest available disclosures.

This places the estimated job cuts at 138. Most of layoffs will be in the Kenyan operation – its biggest and which employed 624 people or 67.6 percent of the total staff count at the end of 2019.

Britam said employees whose roles have been affected by the restructuring are eligible to apply for the voluntary early retirement.

The exit package includes compensation for accrued leave days, the balance of medical cover for 2021 and notice pay as per individual contracts.

The company also said it would make ex-gratia payments above the statutory minimum of 15 days for each year of service, subject to board approval.

A source familiar with the matter said the insurer plans to pay 30 days for each year worked or double the legal requirement.

Those who would not have applied and their roles impacted by the restructuring will lose out on some of the benefits and will be given a one-month redundancy notice.

The company spent a total of Sh3.9 billion in staff costs in the year ended December 2019, eating up 10.7 percent of the total income of Sh36.4 billion in the period.

In the half year ended June 2020, Britam slid into a net loss of Sh1.63 billion from a net profit of Sh1.67 billion a year earlier.

The loss was largely caused by paper losses on its listed equities investments, including stakes in Equity Group and HF Group, as the Covid-19 pandemic intensified the bear run on the Nairobi bourse.

The new retrenchment is being implemented under the leadership of the new chief executive Tavaziva Madzinga, who was appointed on February 1, replacing Benson Wairegi who had been with the company for four decades.

Mr Madzinga, a Zimbabwean national who previously served as the chief executive of Old Mutual’s Kenyan business, has been tasked with boosting returns for Britam’s shareholders.