Britam Holdings Plc FY20 Results Presentation 29 April 2021 1 Disclaimer The information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. It is the responsibility of any person publishing, downloading or communicating the contents of this document or communication, or any part thereof, to ensure compliance with all applicable legal and regulatory requirements. The content of this presentation does not represent a prospectus or invitation in connection with any solicitation of capital. Nor does it constitute an offer to sell securities or insurance, a solicitation or an offer to buy securities or insurance, or a distribution of securities in any country or jurisdiction where it is contrary to local law. Such persons should inform themselves about and observe any applicable legal requirement. 2 Content Overview ○ Operating Environment Highlights Group Managing Director ○ Strategic Focus The Numbers ○ Group Financial Performance Finance Director ○ Select BUs Financial Performance Strategy, Outlook & Focus for 2021 Group Managing Director 3 Overview Britam Holdings Plc FY20 Results Presentation | April 2021 4 4 Britam at a Glance Britam is a leading diversified financial services group listed on the Nairobi Securities Exchange with a presence in seven countries Est Offices Staff Kenya 1965 32 642 The group offers a wide range 2010 9 64 Uganda of financial solutions in:- o Life Assurance, Rwanda 2012 3 41 o General Insurance, o Health Insurance, o Retirement Planning, S Sudan \ 2012 1 16 o Asset Management, and Property. Tanzania 2014 8 64 Malawi 2014 2 68 Mozambique 2014 4 42 Leadership & Accolades o Maintained leadership in Life Assurance in Kenya o Won the Association of Kenya Insurers’ (AKI) Life Insurer of the year 13 years in a row o Fire (Financial Reporting) Awards 2020 1st Runners up in Insurance Category 5 Our Operations Remained Resilient in a Tough Year Unprecedented Resilient Operating Strong Operating Disruption and Crisis Results Cashflow Generation • Growth in Group Topline especially • Lives and livelihoods adversely impacted • Ahead of peers in operating supported by regional General Insurance • Volatility in local and global capital markets cash flows • Drop in operating expenses • Economic growth impacted by lockdowns • Operating Cash Flows with and restrictions a 4 year 11% CAGR Support to Our Adaptive People Operations • Premiums relief initiatives to our clients • Prioritized health and safety of our employees and advisers • Support to Covid-19 emergency fund and to vulnerable • Expansion of service to clients through’ digital platforms members of society • Enhanced service delivery through support to our FAs 6 Weak Macroeconomic Performance Kenya and the Regional Markets GDP (%) Bond Yields(%) Supported by Flight from Equities Weak Performance by Listed Equities Appreciation of the USD against KES / UGX 7 Source: World Bank, NSE, JSE, CBK Positive Impact of our Resilient Response to the Crisis Navigation through the crisis Year 2021 + Financial Operational Strategic Shift Focus on Performance Operational Continuity Focus on Roll out of 2021-25 Customer Centric Strategy by 1H21 Investment Returns optimization Health and safety of our people 80+% Employees working safely Review of asset allocation in line with and remotely from home operating environment with interest Roll out of our New customer and dividend income growing by 22% Continued service to customers segment based Operating Model Continued to serve our customers 4% revenue growth achieved in a with increased focus on contactless Covid-19 year options Customer Centric Organization Structure Focus on Cost Containment Empowered our Financial Advisors 6% decline in underlying opex as we (FAs) through a portal with monthly dropped non-essential expenses digital applications up c10-fold from April to Dec 2020 8 Our Strategic Focus Britam Holdings Plc FY20 Results Presentation | April 2021 9 Key Learnings from our 2016 – 2020 Strategy Based on financial performance to date, we undertook an analysis of key areas of improvement going forward. The baseline analysis, yielded the following results: Need to build on Ground in customer Deliver a truly successful stories centric vision transformational plan • Launch of AMC Uganda • Customer at heart of what we do; be more • High risk of market disruption (telcos, banks, • Strong and growing topline and profitability purpose driven insurtechs) contribution from Regional GI units • Large underpenetrated insurance market • Turnaround of GI Kenya to profitability across geographies • Deployment of online portals for • Ambition to drive exponential growth through intermediaries and customers new models Address challenges Need to still address Deepen customer insights in implementation critical performance issues to craft solutions • Challenge has been in "how" - • Both end consumers and channel partners • Operating cost structure a key concern - executing these strategies • Leverage recent technology investments driven by centre • Need to be more agile and quick • While intermediated, look at solutions within • Yet to fully realise benefits of major recent IT to market programme agents & brokers • Concentrated investments yielding volatile performance 10 Critical Imperatives to Support our Transformative Strategy Reground business Transform for future Enable the journey Customer at the heart Led by new segment units Address performance challenges Organise for the future Optimise approach to Turnaround key cost customer drivers Embed customer- Forge strategic Shift investment strategy centricity partnerships Leverage data & analytics Unlock next tier of customers Expand regional footprint 11 The Numbers Britam Holdings Plc FY20 Results Presentation | April 2021 12 Strong Operating Results with Growing Revenue and Assets GEP & Fund Management Fees – Shs bn Investment income – Shs bn CAGR CAGR 35.00 8% 9.00 11% 28.82 7.93 30.00 27.67 8.00 6.97 24.06 24.99 6.67 25.00 7.00 21.22 6.00 5.22 20.00 5.00 4.45 15.00 4.00 3.00 10.00 2.00 5.00 1.00 - - 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 AUM - Shs bn Total Assets - Shs bn CAGR 160 CAGR 13% 300 137 23% 140 250 125 250 227 120 99 104 200 100 84 147 80 150 130 109 60 100 40 50 20 13 0 - 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 GI Performance Contributing Profitably to the Group Group Life GI Regions GI Kenya Revenue (Gross Earned Premium) vs 2019 Shs 28.2 billion (+4.2%) Shs 12.4 billion (-10.6%) Shs 7.9 billion (+50%) Shs 8.0 billion (-1%) Profit/(Loss) Before Tax – Shs billion -312% -195% +20X +222% 4.6 3.7 0.80 0.4 0.04 (0.3) 2019 2020 2019 2020 2019 2020 2019 2020 (2.9) (9.7) Adverse Impact on PBT of : Fair value losses, HF and Property Impairments, Increase Favorable Impact of:- Favorable Impact of:- in HF share of loss and a provision Shs 5.2 billion to support Wealth Management •Higher retention and new business •Strong investment returns, and Fund LLP. driving revenue growth •Turnaround in health business 14 The Positive and the Negative Movements on the Results Results Positively impacted by 1 Growth in revenue and investment income And by 6% drop in Underlying Opex. Adverse impact from: 2 Fair value losses ○ Realized Shs 71m (2019 : 478m) ○ Unrealized Shs 1,864m (2019: 4,300m) 1 2 3 4 5 6 ○ HF Impairment of Shs 603m 3 Property Impairments of Shs 1,470m (2019:747m) Increase due to relatively higher surrenders and 4 measures to cushion clients A provision of Shs 5.2 billion to support Wealth 5 Management Fund LLP 6 Increase in HF share of loss to Shs 823m (2019: 53m) 15 Strong Operating Cashflow Generation Ahead of Peers Strong operating cashflow generation Britam and Listed Peers FY20 Cash generation / Use in 2020 – Shs bn 5 Yr Operating Cashflows - Shs bn Operating Cashflows – Shs bn CAGR 11% 8.98 7.94 7.67 7.67 7.67 (9.59) 5.02 4.58 7.50 1.81 2.31 7.58 1.49 1.49 FY19 Net cash Net cash Net cash FY20 2016 2017 2018 2019 2020 Britam Peer 1 Peer 2 Peer 3 Peer 4 from used in used in -0.55 operations investing financing activities • CF generation supported by a • Strong growth with 4 year 11% CAGR • Ahead of listed peers… retail base of customers 16 Select BUs Financial Performance Britam Holdings Plc FY20 Results Presentation | April 2021 17 Life Embedded Value Remained Resilient Through Crisis EV Recorded a marginal drop in annualized return at negative 0.6% in spite of the tough operating environment Embedded Value 16.9 18.0 16.1 30.0% 16.0 13.8 25.0% 873 -789 14.0 13.0 20.0% 1,214 14 -1,516 12.0 11.1 16,923 10.0 15.0% -68 171 -693 16,129 8.0 10.0% 6.0 4 5.0% 1 2 3 4.0 2.0 0.0% - -5.0% Total EV Expected Value of Operating Operating Economic Economic Exceptional Dividends Total EV 2016 2017 2018 2019 2020 Dec-19 Return New Experience AssumptionExperience Assumption Items Paid Dec-20 EV in Shs bn VNB - Shs bn RoEV (%) Business Variance Change Variance Change 1 Positive EV earnings from expected releases in margins in the reserves 2 Positive value of new business mainly from profitable business written i.e., individual life and pensions Claims losses were experienced within the Group/Credit Life portfolio and measures to cushion customers from the 3 impact of COVID-19 led to an increase in reserves 4 Negative EV earnings from unfavorable investment experience as a result of market volatility within the Equities and Property portfolios 18 Regions GI Key Driver of General Insurance Revenue & Profits Gross Earned Premium (GEP)