Britam’s Diverse Revenue Fails to Stem Profit Dip in First Half of 2025

Financial Highlights: Growth on Top Line, Pressure on Bottom Line

Britam Holdings posted a profit before tax (PBT) of KSh 2.5 billion for the six months ended June 30, 2025, a decline from KSh 2.8 billion in the same period of 2024. The company attributed the dip mainly to higher claims payouts and the impact of a declining yield curve.

Despite this, Britam recorded strong revenue growth. Insurance revenue rose by 11% to KSh 19.7 billion compared to KSh 17.8 billion in the first half of 2024, reflecting solid performances across both life and general insurance segments. According to Britam’s financial statement, interest and dividend income also climbed 16% to KSh 10.6 billion, while total assets increased by 8% to KSh 225 billion.

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The balance sheet remained resilient, with shareholders’ equity rising to KSh 31.2 billion, up from KSh 29.5 billion at the end of 2024. However, the board did not recommend an interim dividend, opting instead to preserve cash for growth and capital support in an uncertain environment.

Why Profits Fell Despite Rising Revenues

Higher Claims Burden

Britam noted that claims grew sharply during the period, especially in general insurance. Paying claims promptly has always been a central pillar of its customer-centric strategy, but this inevitably pressured margins. Group Managing Director Tom Gitogo stressed during an investor briefing that this demonstrates the company’s “commitment to customers when they need us most.”

Yield Curve Pressure

The insurer also faced reduced investment returns due to a softening yield curve in Kenya. With government securities — a core investment asset for insurers — offering lower yields than in previous years, the returns on reinvested funds diminished. A presentation to investors indicated the yield curve declined by about 1.3 percentage points at the shorter end, affecting income from treasury instruments.

Macroeconomic Headwinds

The Kenyan operating environment continues to be tough, shaped by inflationary pressures, a weakening shilling, and volatile interest rates. The heavy reliance on Kenya for revenue concentration means Britam is especially exposed to these risks, though regional diversification is helping to cushion shocks.

Strategic Shifts and Investments

Digital Transformation

Britam has been investing in digital adoption, including automated underwriting, digital onboarding, and streamlined claims processing. These tools are meant to cut inefficiencies, improve customer service, and build scale without increasing overheads.

Regional Expansion

Kenya remains Britam’s largest market, but the group is eyeing further regional growth. Gitogo confirmed that the firm is actively exploring opportunities in the Democratic Republic of Congo (DRC), where insurance penetration is among the lowest in Africa. He stressed that entry would be “careful and structured,” but acknowledged the market’s significant potential.

Britam already operates in Uganda, Tanzania, Rwanda, South Sudan, Mozambique, and Malawi, which collectively contribute positively to the group’s performance.

Sustainability and ESG Commitments

Britam’s 2024 Sustainability Report showcased notable progress in embedding environmental, social and governance (ESG) practices. The company directed KSh 2.4 billion of procurement spending to local and minority-owned suppliers, including women- and youth-led businesses, and waived fees for firms owned by persons with disabilities. This pushed minority-owned enterprises to account for 21% of all prequalified suppliers.

The insurer also advanced environmental initiatives, such as installing solar systems at Britam Centre, avoiding nearly 78 tonnes of carbon emissions while saving over KSh 2 million in costs. It pledged to plant 60 million trees across Africa by 2030 and introduced an electric vehicle (EV) insurance cover to align with Kenya’s push toward green mobility.

On governance, Britam embedded ESG oversight in its board committees, ensured that 90% of staff underwent anti-corruption training, and achieved 45% female representation across subsidiary boards.

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What It Means for Stakeholders

Investors and Shareholders

For shareholders, the profit dip highlights the volatility of insurance earnings, especially when claims and market yields move against the company. However, the strong revenue growth, rising equity base, and disciplined capital management signal resilience. The decision not to pay an interim dividend may disappoint some investors, but retaining earnings positions Britam to withstand shocks and invest in expansion.

Customers and Policyholders

Customers may see improved service delivery as Britam continues to digitize its processes. Faster claims processing and digital onboarding are expected to enhance client satisfaction. At the same time, rising claims costs could eventually feed into higher premiums in high-risk categories.

The Wider Market

Britam’s performance reflects broader industry dynamics in Kenya. Insurers are facing squeezed margins as claims escalate and investment returns weaken. However, firms with diversified portfolios, strong capital bases, and regional operations — like Britam — are better placed to weather the challenges.

Strengths vs. Vulnerabilities

The Road Ahead: Five Areas to Watch

1. Interest Rate Movements – A rebound in yields could boost investment income in H2 2025.
   
2. Claims Control – Underwriting discipline, risk pricing, and reinsurance strategies will determine whether claims remain sustainable.
   
3. Regional Contribution – Watch for revenue and profit diversification from outside Kenya, especially as new markets like the DRC are considered.
   
4. ESG Execution – Investors increasingly expect measurable ESG outcomes, not just pledges. Delivery on tree-planting, carbon savings, and inclusive procurement will be tracked.
   
5. Digital Scale-up – Adoption of digital tools should reduce costs and improve customer retention if rolled out effectively.
   

Conclusion

Britam’s half-year results paint a picture of a company growing strongly in revenue yet battling margin pressures from claims and weak investment yields. Still, its balance sheet strength, ESG leadership, and digital transformation efforts provide a strong foundation for future growth.

As macroeconomic conditions stabilize and interest rates normalize, Britam could emerge stronger in the second half of 2025. For now, it stands as a case study of how resilience, sustainability, and innovation can help insurers navigate a turbulent operating environment.

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By: Montel Kamau

Serrari Financial Analyst

29th August, 2025