Britam’s Dividend Payout Delayed as Accumulated Losses Persist

Regulatory Hurdle in Dividend Payout

“There is a technical challenge currently. We need to first clear some accumulated loss in our reserves because, from a Company Act perspective, you cannot pay a dividend if you still have accumulated losses,” said Britam CEO, Tom Gitogo.

In accounting, an accumulated loss is the total net losses a company has incurred over time, recorded as a debit balance under retained earnings on the balance sheet.

Britam’s Financial Recovery and Shareholder Returns

Despite the dividend restrictions, Britam is optimistic about improving shareholder value.

“We are still looking at ways to grow our shareholders’ return and give them an opportunity to realize value in their investment, even as we clear the accumulated loss. Based on our current profitability levels, we expect to clear it very soon,” added Mr. Gitogo.

Britam ended December 2024 with Sh1.79 billion in accumulated losses, down from Sh3.41 billion in 2023. However, at the company level, accumulated losses stood at Sh6.48 billion in 2024, up from Sh5.95 billion the previous year.

Britam’s Road to Recovery

Britam first recorded an accumulated loss in 2020, following a historic Sh9.1 billion loss that wiped out the Sh1.77 billion in retained earnings from 2019.

Since then, the company has been on a steady recovery path:

• 2021: Net profit of Sh72.1 million

• 2022: Net profit of Sh1.69 billion

• 2023: Net profit of Sh3.28 billion

• 2024: Net profit surged to Sh5.03 billion, driven by higher insurance and investment income, particularly in long-term business.

Dividend Drought Continues Despite Industry Growth

While Britam delays its dividend payout, other players in the insurance sector have paid out. For example:

• Liberty paid both ordinary and special dividends.

• CIC Group declared ordinary shares and 10 bonus shares per one held.Britam is looking good but dividend will take time.