NAIROBI, Kenya, Feb 14 – The Co-operative Insurance Company (CIC) of Kenya has announced its intention to venture into the property market to claim a share of the sector which continues to register impressive returns.
Managing Director Nelson Kuria said on Monday that the company had already bought an initial 200 acre piece of land in Kiambu where it plans to start putting up housing for high and middle income earners.
"Thika Highway is becoming the in-thing in terms of housing development because transport to Nairobi will be very easy. So that is the first one for us and we are already working with professionals to see the kind of developments we shall do," Mr Kuria told Capital Business.
According to HassConsult a real estate agent, earnings from the real estate sector in the last one decade have surpassed those of the stock market by three times as demand for housing continues to soar.
This coupled with the fact that the low interest regime has resulted in diminished returns for many and in turn many of them have opted to diversify their investments in different areas including the property market.
Mr Kuria said CIC Insurance had joined the foray and disclosed that they were especially targeting Kenyans in the Diaspora who have difficulties in finding trustworthy firms through which they can invest in the housing sector.
"We are consulting our friends in the Diaspora who are in dire need of housing such as the gated estates because they don\’t trust people. They have given money to their brothers to build houses for them but that money has ended up being lost, therefore they are looking for an organisation that they can trust," the MD said.
CIC Insurance will use part of the proceeds from their recent successful rights issue to finance the development. The firm raised Sh600 million in December 2010 in the issue which also saw its share capital increase to Sh1.2 billion.
The co-operative insurer is also banking on its growing cash flow to successfully implement the project which should have kicked off by next year.
"We have a lot of money now and we are growing rapidly which means that our cash flow is very healthy," he added.
The MD spoke during a meeting with editors from various media houses where he decried the industry\’s reluctance to develop innovative products that would in turn result in an increase in insurance penetration level from the current 2.8 percent.
CIC however has developed its own strategy that will see it reach more Kenyans including those who are excluded from formal financial services. For instance, the company has thrown a challenge to the unruly matatu industry to form their own insurance company that can underwrite the Public Service Vehicles.
Mr Kuria said his company was willing to work with such groups to develop the idea further.
"We do not want to underwrite it (transport industry) directly because it can dilute our CIC brand because of the way it is perceived. But we have told them that we can assist them by being strategic investor who gives them technical backup and also inject some funds," he said of the proposal to the matatu industry.
This is one of the big plans that the company has in the medium and long term. Besides venturing into the region, CIC also hopes to float an Initial Public Offering before the end of next year.
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