Britam Holdings acquired a 30 percent stake in reinsurer Continental Reinsurance Kenya for Sh763.78 million in the financial year ended December 2024, new disclosures showed, marking a strategic move to diversify its revenue streams.
The insurer has disclosed the deal in the latest annual report, explaining that the acquisition was through its wholly-owned subsidiary—Britam Life Assurance Company (Kenya).
Britam booked a bargain purchase gain of Sh80.85 million, meaning the stake had a fair value of Sh844.63 million at the time of acquisition. A bargain purchase gain occurs when a company acquires another for less than its fair market value.
Continental Re Kenya is a subsidiary of Continental Re Group, a reinsurer that is headquartered in Lagos, Nigeria, and offers reinsurance services in 50 African countries.
The Kenyan unit, which started as a branch office in 2008 and converted to a subsidiary in 2013, serves as Continental Re’s underwriting centre for the Eastern region that includes Kenya, Burundi, Djibouti, Egypt, Eritrea, Ethiopia, Rwanda, South Sudan, Seychelles, Somalia, Tanzania, and Uganda.
Britam will now account for Continental Re Kenya as an associate, alongside HF Group and Kilimani Hotel Suites Limited.
Associates are all entities over which a company has significant influence but not control, generally accompanying a shareholding of between 20 percent and 50 percent of the voting rights.
The stake in Continental Re brought an immediate impact on Britam’s profitability as it booked Sh121 million pre-tax profit from this associate. This contributed to the rise in Britam’s share of pre-tax profit from associates to a near doubling to Sh421 million from Sh213 million.
Kilimani Hotel Suites, an associate fully owned by Britam Life Assurance Kenya, saw its pre-tax contribution to the group rise to Sh56 million from Sh26 million while that of HF Group rose to Sh244 million from Sh187 million.
During the year, Britam also participated in HF Group’s rights issue, acquiring an additional 722.72 million shares at Sh2.89 billion. At the end of December last year, Britam valued its interest in HF at Sh4.09 billion compared with Sh645.46 million in the prior year following a jump in the per share price to Sh4.51 from Sh3.48.
Britam Holdings posted a 53.5 percent rise in net profit to a record Sh5.03 billion in the financial year ended December 2024, marking the fourth straight year of increasing profitability.
The rise in the net profit from Sh3.28 billion posted in the prior year was lifted by increased insurance and investment income, especially in the long-term business.
The latest profit marked the highest ever in the history of Britam, which in 2020 suffered its worst-ever loss of Sh9.1 billion.
The diversified financial services firm has been on a recovery from the 2020 loss, posting a net profit of Sh72.1 million in 2021 and Sh1.69 billion in 2022.
Britam Group has a presence in seven countries in Africa namely Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique, and Malawi.
The Kenyan reinsurance market in Kenya has a host of key players including Kenya Reinsurance Corporation (Kenya Re), ZEP-RE (PTA Reinsurance Company), Continental Re Group, East Africa Reinsurance Company Ltd, The Heritage Insurance Company Kenya Ltd, African Reinsurance Corporation, Ghana Reinsurance Company Ltd, and First Reinsurance Brokers Africa Ltd among others.
In Kenya, Kenya-Re is the dominant one. The reinsurer, which is 60 percent owned by the Kenyan government, serves over 80 markets through its head office in Kenya as well as three subsidiaries in Cote D’Ivoire, Zambia, and Uganda.
Kenya-Re’s net profit for the financial year to December 2024 retreated by 10.8 percent to Sh4.44 billion due to foreign exchange losses.
During the review period, Kenya Re’s insurance service result— the net amount of insurance revenue less insurance service expenses—grew 4.4 times to Sh2.95 billion from Sh676.96 million, marking one of the best underwriting results for the reinsurer.
However, despite investment income rising by 23.2 percent to Sh5.6 billion, the net insurance and investment result declined by 15.7 percent to Sh6.89 billion, weighing down on the bottom line.
The reduced net insurance and investment income was on the back of the reinsurer posting a Sh1.68 billion net foreign exchange loss compared with a net foreign exchange profit of Sh1.43 billion booked in the previous year as the shilling gained against the dollar.
