Britam Holdings Plc Half Year 2017 Presentation 1 Contents 1. Overview of Business 2. Highlights 3. Our Strategic Initiatives 4. H1 2017 Financial Performance 2 1. Who we are? • Our Business 3 About Britam Holdings Plc Britam is a leading diversified financial services group listed on the Nairobi Securities Exchange. The group has presence in seven countries in Africa namely; Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique and Malawi. The group offers a wide range of financial solutions in Life Assurance, General Insurance, Health Insurance, Retirement Planning, Asset Management and Property. These solutions enable our customers to protect and grow their wealth and achieve their financial goals every step of the way. 4 Group Structure Britam Holdings Plc Insurance Britam Asset Britam Properties Portfolio Business Managers – 100.0% Investments Britam Asset Britam Asset Equity Bank Managers Kenya Managers Uganda HF Group - 48.8% Group – 8.1% – 100.0% – 100.0% Britam Britam Britam General Britam Britam Britam Britam Britam Insurance Life Insurance Insurance Insurance Insurance Insurance Insurance Malawi – Tanzania Kenya – Kenya – Uganda – S. Sudan Rwanda Mozambique 100.0% 100.0% 100.0% – 55.0% 100.0% – 100.0% - 100% – 98.0% 5 Vision, Mission and Values “Providing you with financial security EVERY MISSION STEP OF THE WAY” “To be the LEADING diversified financial services VISION company in our chosen markets across Africa” BRAND “With you every step of the way” POSITION Respect Innovation VALUES Integrity Customer Focus 6 2. Highlights • Macro-economic review • Industry highlights 7 Macro-Economic Review GDP Rates Mozambique 4.2% Malawi 4.5% Rwanda 6.1% Tanzania 7.1% Uganda 3.9% Kenya 4.8% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 2017F 2016 Economic growth forecasted for most economies we operate in. Most currencies in these markets were stable during will remain stable against major global currencies. 8 Industry Highlights In Kenya, Q1 2017, insurance premiums grew by 14.4% Insurance compared to the 9.6% growth in Q1 2016. Life insurance premiums at Shs 21.56 billion up 9.6%. Shs 41.6 billion up 24.8%. General insurance premiums at Shs 41.6 billion up 24.8%. Industry Assets Under Management (AUM) grew to Asset Management Shs 1 trillion in 2016 from Shs 800 million in 2015. Introduction Exchange Traded Funds (ETFs) . Regulatory In Kenya, we saw the introduction of Risk Based Capital (RBC). Introduction of Cash & Carry policy in Rwanda. Competition We have seen entry of new players to the Kenyan market i.e. Allianz and Prudential. 9 In 2017, our Kenyan Business Units have maintained strong market share against competitors: Life Insurance Industry Kenya General Insurance Industry Kenya Asset Management Industry Kenya Market Share per Company (Q1 2017) Market Share per Company (Q1 2017) Market Share per Company (Q1 2017) CIC Britam 21.4% Jubilee 11.0% 24.2% Britam 18.7% ICEA Lion 18.7% UAP/Old Mutual 8.0% Old Mutual 14.5% Jubilee 11.7% Britam 7.5% ICEA 9.6% CIC Life 7.7% APA 6.8% Stanlib Investments 5.9% Sanlam 7.0% CIC 6.7% Sanlam 5.7% Liberty Life 5.3% AAR 6.0% CBA Unit Trust Scheme 5.5% Old Mutual/UAP 5.1% ICEA Lion 5.4% Equity Investment Bank 4.3% Pioneer 4.6% Britam Life maintained leadership Britam General grew market share Britam Asset Managers. position. to 7.47% and attained 3rd in position. 10 Our regional entities have continued to grow their market share. Uganda Malawi Rwanda General Insurance Industry Uganda General Insurance Industry Malawi General Insurance Industry Rwanda Market Share per Company (Q1 2017) Market Share per Company (Q2 2017) Market Share per Company (2016) Britam Uganda increased market Britam Malawi maintained a market Britam Rwanda maintained a share to 3rd Position. Share at 13%. market share of 6%. 11 3. Our Strategic Initiatives 12 We have made significant progress against our key strategic objectives outlined in our new “Go for Gold” 2016 – 2020 strategy 13 Key strategic initiatives that we will continue to focus on in 2017 to enhance our financial performance include… 14 4. Half Year 2017- Financial Performance 15 Summary Group Consolidated Financial Results Shs Millions June 2017 June 2016 Gross earned premiums 11,236 10,520 Fund management fees 451 490 Investment income 2,772 2,726 0.6 Net insurance claims,Kenya 2.6% increase in policy holder's benefits and loss adjustment expenses 7,183 4,248 1.0% & Interest1.0% payments/ increase in unit value Operating expenses & finance costs 4,488 4,043 Profit beforeTanzania tax 1.0% 1,282 2,873 Total comprehensive income 1,906 1,875 16 Statement of comprehensive income: Total Income up 16% CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS Group 6 Months to 6 Months to Shs’000 30-06-2017 30-06-2016 Gross earned premium and fund management fees 11,688,195 11,010,588 Less: reinsurance premium ceded (1,491,205) (1,639,368) Net earned revenue 10,196,990 9,371,220 Investment income 2,772,369 2,726,124 Gains/ (losses) on financial assets at fair value through profit or loss 1,090,362 (318,895) Commissions earned 514,775 416,941 Other income 118,495 491,893 Total income 14,692,991 12,687,283 Expenses 0.6 Net insurance claims, increase in policyholder's benefits and loss 6,669,113 3,608,468 adjustment expenses Kenya 2.6% Interest payments/ increase in unit value 513,893 639,912 Operating and other expenses 3,898,804 3,529,665 1.0% Finance costs 589,772 514,036 1.0% Commissions expense 1,816,824 1,825,156 Total expenses 13,488,406 10,117,237 Profit before share of the profit of associate 1,204,585 2,570,046 share of profit of associate 77,629 303,252 Profit before tax 1,282,215 2,873,298 Income tax (expense)/Tanzania credit 1.0% (287,125) (1,094,403) Profit for the year 995,089 1,778,895 Gains/ (losses) on revaluation of financial assets at fair value through 963,393 (9,587) other comprehensive income Others (52,385) 105,885 Total other comprehensive income 911,008 96,298 Comprehensive income for the year 1,906,097 1,875,193 17 Gross Earned Premiums & Fund Management Fees 0.6 Kenya 2.6% 21,221 20,324 1.0% 1.0% 14,472 Figues in Shs' Millions Shs' in Figues 9,461 Tanzania 1.0% 10,637 11,011 11,688 6,025 4,669 2013 2014 2015 2016 2017 Half year Full year 18 Gross Earned Premium and Fund Management Fees Total GEP & Fund management fees 11.7bn Life Assurance GI Kenya Regional GI AMC Britam Property Kenya 5.5bn 3.9bn 1.9bn 453mn 47.5mn 46.5% 33.1% 16.2% 3.9% 0.4% South Sudan Uganda Tanzania Mozambique Malawi Rwanda 203mn 565mn 523mn 126mn 332mn 148mn Note: The above figures do not include inter company transactions. 19 Profit Before Tax (Shs) Profit Before Tax 1.3bn Life Britam Corporate Assurance GI Kenya Regional GI AMC Property 179 mn Kenya 46.9mn 102mn 182.4mn (66.5mn) 838mn South Sudan Uganda Tanzania Mozambique Malawi Rwanda 48.1mn 65.6mn 42.8mn (33.2mn) (6.3mn) (15mn) 20 Total Assets at Shs 90.6bn 90,623 83,643 77,632 72,450 46,903 Figures in Shs' Millions Shs' in Figures 2013 2014 2015 2016 Jun-17 21 Group Total Assets- June 2017 Other Equities, 3% NRBA, 17% Equity Bank, 13% Associate, 7% Money Market, 8% Fixed Income, 30% Property, 16% Unit Trusts, 7% Equities Holdings continue to exhibit recovery against a slump experienced in 2016. 22 AUM up 14% to Shs 124bn 130,000 124,458 108,889 110,000 90,450 90,000 70,000 1.0% 1.0% 54,536 Figures in Shs Millions Shs in Figures 50,000 36,295 30,000 10,000 2013 2014 2015 2016 June-17 23 Embedded Value (EV) grew by 20% Embedded Value (EV) Dec-2016 Jun-2017 % Change Shs 000s Shs 000s % Adjusted Net Worth (ANW) 6,453,340 7,529,568 17% Value of Inforce (VIF) 5,860,583 7,218,160 23% Embedded Value (EV) 11,093,378 13,299,697 20% Increase in EV 552,385 2,206,320 Dividend Paid 210,000 0 RoEV (Return on EV) 7.2% 19.9% • EV is the net assets of the company plus the value of future profits from business sold and allowing for cost of holding required capital. • Gives true worth of life company by valuing the value of business written. 24 Embedded Value Notes • The Value of Inforce (VIF) has increased 23% from Dec 2016. This is expected to pick up over the year as New Business sales are achieved. Also the changeover in regulation means the more conservative margins are released in the future. This is also as a result of the change in expense assumptions as we revised the allocation of expenses between LOB’s. • The Cost of Capital has increased by Shs 227 million. This has mainly been driven by the exclusion of DA Assets from the rest of the portfolio of Life Assurance Assets when calculating Market Risk Capital. • The Regulatory solvency calculation does NOT take into account Shs 3.74 billion worth of net assets (intangible assets, fixed assets and mark to market adjustments on asset values). • Overall, there has been an increase in EV of Shs 2.206 billion (From Dec 2016 to June 2017). • Embedded Value Earnings = KES 2.206 Billion, Return on EV as at 30 June 2017 was 19.9% compared to 7.2% for full year to 31 December 2016.