Britam Holdings Plc recently reported a remarkable 53% increase in net profit for 2024, reaching Sh5 billion, up from Sh3.28 billion in 2023.

Despite this impressive financial performance, shareholders will not receive any dividend payouts for the fourth consecutive year.

The insurer’s management, led by CEO Tom Gitogo, has cited accumulated losses as the primary reason behind this decision.

Understanding Britam’s Dividend Freeze

Accumulated Losses Must Be Cleared First

Britam first entered an accumulated loss position in 2020 after posting a record Sh9.1 billion loss. Since then, the company has focused on recovering financially, achieving consistent profit growth:

• 2020: Loss of Sh9 billion
• 2021: Recovery with a profit of Sh72 million
• 2022: Profit jumps 2242% to Sh1.7 billion
• 2023: Profit rises 97% to Sh3 billion
• 2024: Profit surges 53% to Sh5 billion.

Despite this turnaround, accumulated losses must be wiped out before dividends can be considered. The company’s balance sheet shows these losses have been significantly reduced from Sh9.1 billion in 2020 to Sh1.79 billion in 2024.

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Regulatory & Financial Prudence

Under financial regulations, companies must clear accumulated losses before paying dividends. CEO Tom Gitogo emphasised this point, stating that the firm is still working on restoring shareholder value before distributing earnings.

“We need to first wipe out some accumulated losses in our reserves because from a Company Act perspective, you cannot be able to pay a dividend if you still have accumulated losses,” he explained.

How Britam’s Performance Compares to Local Banks

While Britam shareholders wait for dividends, many local banks have announced payouts for the financial year 2024:

• StanChart – Sh45 per share
• Stanbic – Sh20.7 per share
• DTB – Sh7 per share
• NCBA – Sh5.50 per share
• Equity – Sh4.25 per share
• I&M – Sh3 per share
• KCB – Sh3 per share
• Absa – Sh1.75 per share
• Co-op – Sh1.50 per share

This contrast highlights Britam’s ongoing financial restructuring compared to the strong dividend-paying position of major banks.

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Looking Ahead: When Will Britam Resume Dividends?

Britam’s recovery strategy includes increasing investment income, reducing costs, and further strengthening its balance sheet. While it has made significant progress, shareholders may have to wait another year or more before dividends resume.

CEO Gitogo reassured investors that the company is actively working to enhance profitability and shareholder returns. The insurer remains focused on growth while ensuring financial stability.

For now, Britam investors will have to remain patient as the company continues its journey toward full financial recovery and eventual dividend reinstatement.