Britam Holdings has stopped increasing investments in equities to minimise exposure in the wake of falling share prices of many companies at the Nairobi Securities Exchange (NSE).
The position has seen Britam turn more into treasury bills and bonds instead, where returns have been rising in the past few months.
Britam chief executive Tom Gitogo says the firm has paused equities investments on the back of falling prices where NSE has this year shed by 22 percent or Sh441 billion in the first eight months of this year.
“We have not made additional investments on the stock exchange and that will remain the case for the foreseeable future. We have looked for other avenues for our investment and that strategy is bearing fruits,” he said.
“Britam will, not without a strategy, invest in the NSE. Even our own stock at about Sh5 is a significant discount on the true value.”
The falling equities prices have come in an environment of improved returns in developed markets such as the US where interest rates have been rising.
The falling Kenya shilling against the dollar has added to the capital flight by foreign investors.
The stake of the long-term insurer’s investment in quoted ordinary shares was at 2.9 percent in March compared with six percent in a similar period in 2020, driven by a significant reduction in the value of stocks and sell-off.
Britam’s fair value losses from equities and government securities reduced to Sh1.8 billion in the half year ended June, from Sh2.3 billion, helped by the stance to not increase equities investment and marking bonds to market.
“We took time to structure our investment portfolio and we are more efficient at matching our long-term insurance liabilities with bonds that are held to maturity,” said Mr Gitogo.
Britam last year completed the sale of its 6.7 percent stake in Equity Group to the International Finance Corporation, raising about Sh13.9 billion.