NAIROBI, Kenya, Sep 21- CIC Insurance is set to double its current share capital from Sh600 million to Sh1.2 billion through a Rights Issue.
This follows an Extraordinary General Meeting (EGM) that saw shareholders pass several resolutions, including an approval for the de-merger of the company’s life and general lines of insurance business.
“The extra share capital will help us to achieve our quest of venturing into regional markets such as Southern Sudan, the rest of East Africa and other attractive regional markets,” said CIC Insurance Managing Director Nelson Kuria on the sidelines of the EGM.
The company’s board is scheduled to meet and determine the price and the date of the rights issue. CIC Insurance share price is presently estimated to be in the region of Sh35 and Sh38.
The company’s de-merger of life and general insurance business is part of safeguarding and consolidating its present successes by shielding each class of business from the “toxicity” of the other as learnt from the experience of the global financial crisis.
“The trend world over in the insurance industry is moving away from cross subsidising of risk among the various business classes,” said Mr Kuria of the exercise which will see the insurance company renamed CIC Insurance Group.
In the restructuring and separation of the two lines of business, CIC Insurance Group will be the holding company with subsidiary which will include CIC Life Assurance, CIC General Insurance and CIC Asset Management. There will also be a Co-operative Insurance Society which will hold all the share capital of all co-operative societies who will remain the majority and dominant shareholders.
After sustained high annual growth rate of 25 percent in the last decade, CIC Insurance is keen to maintain its growth momentum by tapping into the micro-insurance niche and the under-developed life business to grow its market share.
“We want to drive growth through product innovation, non-conventional distribution channels, and accessible payment platforms aimed at the mass market,” said Mr Kuria.
Only a year ago, the company netted Sh2.9 billion in gross premiums, and is projecting to rake in Sh4.1 billion in 2010.
“Our future target is even more ambitious. We are striving to be one of the top three high performing insurance companies in the country by end of 2013,” the MD added.
The firm recently enlisted a team of three consultants to chart its future strategic growth plan through long-term posturing that will be underpinned by proactive leadership and management and good corporate governance.
The insurer which has set 2013 as a deadline for listing at the Nairobi Stock Exchange has had a chequered history. In the early 1990s, the firm was teetering on the brink of collapse with a bloated workforce, poor investment strategy and lack of professional and technical expertise.
In 1995, CIC Insurance was technically bankrupt and the Commissioner of Insurance declined to renew its license as local co-operatives who were the only shareholders failed to raise KShs30 million to achieve the requisite minimum capital of Sh50 million. Foreign investors who injected Sh90 million to prop the firm by the end of 1995 soon lost hope and sought to sell the company in early 1999 to recover their money.
This led to another crisis as the board and management made frantic efforts to thwart the bid by foreign shareholders to sell off the company. It’s transformation, attested to by the rise from the bottom five at the beginning of 1999 to the seventh largest insurance company by 2007, would be realised with change of guard and the subsequent crafting of a strategic plan for the period of 1999-2003.
Only last year its pre-tax profit leaped by 26 percent to Sh277 million from Sh219 million in 2008 which its assets increased by 16 percent to Sh3.5 billion.
In its latest half year results, the insurer’s gross premium rose from Sh1.5 billion in June 2009 to Sh2.5 billion in June 2010. In fact, all business classes had underwriting profits save for motor private and fire industrial and personal accident.