, NAIROBI, Kenya, Mar 12 – CIC Insurance group plans to invest over Sh1.2 billion to open three subsidiaries this year within the East African region.
Speaking while announcing the 2013 company’s performance on Wednesday, CEO Nelson Kuria said the company will venture into South Sudan, Uganda and Malawi between May and July.
CIC plans to form a subsidiary in South Sudan in May through a partnership with the government where it will own a 69 percent in the subsidiary while the Co-operative Bank of South Sudan will acquire the remaining 31 percent.
“What is happening in South Sudan is a temporary setback and we are not intimidated by the skirmishes that are there. We know that Juba is already settled and stable and business is going on as usual,” Kuria expressed optimism.
The expansion to Uganda in July will result in the acquisition of a 51 percent stake in a new subsidiary while the remaining 49 percent to be held by the Uganda Co-operatives Savings and Credit Union.
In Malawi, CIC will start with a 70 percent stake in a new subsidiary “due to the huge capital injection” with the remaining being held by Malawi Union of Savings and Credit Cooperative and the Farmers union of Malawi.
All the subsidiaries will be under the name ‘CIC Africa’.
The regional expansion plans led to a 20 percent increase in the company’s total expenses for 2013 to Sh2.4 billion from Sh2 billion the previous year.
CIC recorded a slight growth in its 2013 full year net profit of 1.4 percent to Sh1.4 billion from Sh1.3 billion.
Investment and other income increased by 23 percent to Sh11 billion up from Sh9 billion mainly due to acquisitions of new business through innovative and distribution channels.
However the claims paid out by the company grew by 30 percent to Sh6 billion from Sh4 billion attributed to higher claims in medical, motor private and group life products.
The medical division closed the year with revenue of Sh2.35 billion posting a loss of Sh293.8 million.
“Medical Insurance is a business that is notorious in this market. In fact, all players who are doing medical are facing a major challenge in terms of claims,” Kuria said, “you might be going to the hospital with a headache and then you are put through machines to measure you heart, but it’s adding no value to the health of the patient.”
To address the issue the firm has now decided to employ a professional doctor to head the medical division to help in detecting the unnecessary medical processes given to members among other frauds.
“It would only take a medical doctor to rein in the other medical doctors from the service providers. Otherwise when they write in the usual ‘Greek’ we will never understand what is happening,” Kuria said, optimistic that the move will bring a turn around.
The directors have recommended a final dividend of 10 cents per share to the shareholders and a bonus of one share for every five ordinary shares held.