Britam profit drops as claims and slower investments bite
Net investment income increased 30.2 per cent to Sh17.28 billion from Sh13.27 billion, but this growth fell short of last year’s performance, when investment income had surged 150 per cent, significantly boosting profits.
Britam Holdings’ net profit for the first half of 2025 fell to Sh1.74 billion, down 13.6 per cent from Sh2.04 billion recorded in the same period last year, as higher claims payouts and slower returns on investments weighed on the insurer’s earnings.
The company’s financial results released on Friday show that while insurance revenue grew to Sh19.69 billion from Sh17.8 billion, rising claims and reinsurance costs cut the net insurance service result by 39 per cent to Sh1.28 billion.
Net investment income increased 30.2 per cent to Sh17.28 billion from Sh13.27 billion, but this growth fell short of last year’s performance, when investment income had surged 150 per cent, significantly boosting profits.
Analysts attribute the slowdown to a declining yield curve, which reduces returns on Treasury Bills, Treasury Bonds, and other fixed-income investments where insurers place premiums.
Kenya’s insurance sector is facing challenges as falling returns on government securities and lower fixed deposit yields impact earnings, contrasting with the previous year when higher investment returns supported profitability.
Insurers, especially those in long-term coverage, have increasingly relied on Treasury Bills and Bonds, which now make up over 70 per cent of investment portfolios.
Britam’s increased expenditure on settling claims and reinsuring policies, combined with slower growth in investment income, leaves the company looking to the second half of 2025 to achieve full-year profit growth.
Despite these challenges, Britam Holdings Managing Director Tom Gitogo expressed confidence in the firm’s resilience.
“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,” he said.
He added, “Looking ahead, we remain confident that as interest rates stabilise and economic conditions improve, Britam is well positioned to deliver a stronger performance in the second half of the year.”
