Old Mutual Holdings is seeking to restructure its balance sheet with the goal of clearing accumulated losses, a decision that will allow it to pay dividends.
The regional insurer plans to use its share premium of Sh4.66 billion to clear part of the accumulated losses, which stood at Sh7.06 billion by the end of 2025.
Share premium represents the amount investors pay above the assigned share value.
The Company Act bars an institution from paying dividends if it has accumulated losses.
If the transaction is approved, it will see Old Mutual’s accumulated losses drop to Sh2.39 billion, with the company saying it will take additional actions to clear the balance.
‘The board approved the commencement of a phased balance sheet restructuring designed to eliminate the accumulated negative earnings of Sh7,064,040,000 as at December 31, 2025,’ the insurer said a press statement.
‘In the first phase, the company will seek a court-approved reduction of its share premium account of Sh4,664,801,000 in its entirety.”
The share premium reduction has to be approved by shareholders in an annual general meeting scheduled for end of this month and regulators, including the Capital Markets Authority and a High Court order.
The insurer said the action would have no cash or shareholding impact.
The company, a subsidiary of South Africa’s Old Mutual Limited, has minority shareholders who trade on the over-the-counter market.
The South African financial services giant acquired UAP Holdings in 2020 and later merged the business with its existing insurance operations in Kenya.
The combined business, trading as Old Mutual Holdings Limited, posted losses from 2020 before turning a profit in 2025, resulting in accumulated losses growing to Sh7.06 billion last year.
The company did not disclose what the second phase of the restructuring will involve.
“The proposal supports our ongoing efforts to optimise the balance sheet, enhance financial flexibility and position the business for sustainable long-term growth and value creation for our shareholders,’ Old Mutual Group Chief Executive Officer Arthur Oginga said.
Old Mutual becomes the second insurer this year to use share premium to clear its accumulated losses.
Britam Holdings is in the process of a similar balance sheet restructuring, having received shareholders’ approval to use share premium to clear accumulated losses last month.
Britam had an accumulated loss of Sh5.8 billion in the year ended December 2025.
The insurer sought to clear the amount using the share premium, which stood at Sh13.2 billion. The share premium account is to be reduced to Sh7.3 billion.
Britam has lowered the accumulated loss in the last five years to Sh5.8 billion using dividend payouts from its subsidiaries.
The insurer has been relying on dividends from its subsidiaries to cut back the accumulated losses as it is not an operating entity.