British-American Investments made a pre-tax profit of 1.8 billion shillings in the six months to June this year up from a loss of 109.6 million shillings in the same period last year. This ends the company's loss making trend experienced in the latter part of last year.

Speaking during an investors’ briefing at a the Intercontinental Hotel yesterday morning British American Investments CEO Benson Wairegi unveiled that the company's 17-fold growth in pre-tax profit was as a result a new strategy to rejuvenate earnings through fixed income investments and better liquidity management.  This was their first profit since the financial year ended December 2010 where a 2.9 billion shilling profit was made. The company owns the majority of British American Insurance Company, British American Asset Managers as well as Britam Insurance Company in Uganda.

Additionally, the company’s investment income for the six months to June grew more than 8000% to 2.7 billion shillings from 31.8 million shillings in the same period last year largely through returns from fixed income investments which the company refocused on this year after making losses from equity investments.

By the end of last year, the company had made a 1.7 billion shilling pre-tax loss which, according to a profit warning issued by the company in the wake of poor expected earnings for 2011, was due to an overexposure of its investment portfolio in the Kenyan Stock Market which performed poorly last year dropping 31.4 percent from 2010.

To grow future earnings, Mr. Wairegi said that the company will “Reduce its concentration on the capital markets to property and fixed income investments” to reduce “volatility in earnings” from equity investments at the Nairobi Securities Exchange. Currently, 39 percent of the company’s portfolio is invested in other Company Equities and 7 percent in properties while the rest is split between Unit Trusts, Fixed Income Securities, Cash Deposits and other assets.

By the year 2016, Mr. Wairegi said that British-American Investments should achieve an “optimum asset allocation” with 20 to 30 percent of its total investments in property compared to the current 7 percent.

In line with this, the company is already engaged in the development of 10 billion shilling property fund and an Office Development in Nairobi’s Upper Hill Area which should begin construction this year. Plans are also underway to diversify into residential property investments.