Members seeking to exit Safaricom Investment Co-operative (SIC) are having trouble finding buyers for their shares, highlighting the difficulty of liquidating investments in saccos.
The illiquidity of SIC’s shares has been compounded by the value of the stocks remaining at Sh52.5 each since 2019, a decline from the peak of Sh525 seen in 2017 and 2018.
The fall in the share price is partly due to lower returns in recent years.
“The movement of shares in the secondary market has been slow in recent years. We note that this has caused pain and frustration to investors who have decided to sell their shares,” Rabecca Bisanju, chairperson of the supervisory committee says in SIC’s latest annual report.
“The viable option would be to improve the performance of the company to make it attractive to the general public in order to accelerate share movement in the secondary market. The implementation of the Strategic Plan 2023 – 2027, in particular strategic theme pillar one (growth of the SIC investment portfolio), is expected to result in a dividend payout of at least 13 percent by 2027.”
SIC has more than 5,000 investors. The investment co-operative, which draws the bulk of its revenue from the sale of land and houses, helped its members trade 1.66 million shares in the year ended December. This was slightly down from the volume of 1.67 million shares traded in 2022.
Members of other saccos –focusing on the basic deposit and lending business— also have difficulty liquidating their share capital as they have to find another member willing to buy them out.
To leave SIC, a member must offer their shares for sale on a first-in, first-out (FIFO) basis. Alternatively, a member can sell their shares to another existing member, but this is arranged via email. If there are no buyers, the shares can’t be sold, and the member is stuck with them until there is interest from other investors.
Consequently, SIC has paid a rebate of less than 10 percent since 2019 when it made zero distributions. Last year, it paid a rebate rate of 5.75 percent amounting to Sh143.8 million, down from seven percent (Sh176.9 million) in 2022.
The company recorded a net operating surplus before rebates of Sh203.4 million last year, down from Sh268.1 million in 2022 on the back of reduced revenues in the core real estate business.
Sale of land and houses dropped to Sh1.5 billion in the review period from Sh1.8 billion a year earlier, resulting in gross surplus from this business line declining to Sh437.5 million from Sh471 million after netting off cost of acquiring the properties.
In its latest change of leadership, SIC’s board has appointed Churchill Winstone Ochieng as the new chief executive, replacing Sarah Wahogo.
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Britam half-year net profit hits Sh2bn on higher investment income
Insurer and financial services provider Britam posted a 22.5 percent jump in net earnings for the half-year ended June 2024, to Sh2 billion, buoyed by increased investment income.
The rise in half-year net profit from Sh1.64 billion posted in a similar period last year came on the back of net investment income rising 2.5 times to Sh13.27 billion from Sh5.3 billion.
“We are confident in the growth and performance trend that Britam has achieved, supported by its subsidiaries in Kenya and the region. Our business is expanding its revenue base while effectively managing costs,” Britam Chief Executive Officer Tom Gitogo said.
“Our customer-centric approach is fueling growth in our customer base and product uptake, particularly through micro-insurance, partnerships, and digital channels.”
The investment income growth was fueled by interest and dividend income rising 34 percent to Sh9.1 billion, which the insurer attributed to growth in revenue and the gains from the realignment of the group’s investment portfolio.
Britam also booked a Sh3.79 billion gain on financial assets at a fair value, compared with a Sh1.8 billion loss posted in a similar period last year.
The increased investment income helped offset the 12.7 percent decline in net insurance service result to Sh2.13 billion in the wake of claims paid out rising at a faster pace than that of premiums received.
Britam said insurance revenue, which is money from written premiums, increased to Sh17.8 billion from Sh16.6 billion, primarily driven by growth in the Kenya insurance business and regional general insurance businesses, which contributed 30 percent of the revenue.
The group has a presence in seven countries in Africa namely Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique, and Malawi.
Britam’s insurance service expense hit Sh13.6 billion from Sh11.3 billion, while net insurance finance expenses rose 2.6 times to Sh12.3 billion during the same period.
“Net insurance finance expenses increased mainly due to growth in interest cost for the deposit administration business driven by better investment performance. This has also been impacted by a decline in the yield curve, which has led to an increase in the insurance contract liabilities. The increase has been offset by a matching increase in fair value gain on assets,” said Britam.
Britam’s growth in profit is in line with that of other Nairobi Securities Exchange-listed insurers, which have seen a rise in profits.
Jubilee Holdings net profit in the six months increased by 22.7 percent to Sh2.5 billion on increased income from insurance, helping the insurer maintain Sh2 per share interim dividend.
CIC Insurance Group posted a 0.64 percent rise in net profit to Sh709.99 million in the same period as net earnings of Liberty Kenya nearly tripled to Sh632 million from Sh213 million, while Sanlam Kenya emerged from a loss to post a Sh282.2 million net profit.
