CIC to up share capital to Sh3b

May 16, 2011

, NAIROBI, Kenya, May 16 – CIC Insurance Group shareholders have resolved to increase the insurer’s authorised share capital to Sh3 billion from Sh1.2 billion by creating 90 million ordinary shares during the firm’s 33rd Annual General Meeting held over the weekend.  

This comes shortly after the Group doubled its share capital from Sh600 million to Sh1.2 billion through a rights issue late last year. The shareholders equally passed a resolution to raise additional share capital by listing at the Nairobi Stock Exchange in the second quarter of 2012 subject to approval by pertinent regulatory bodies. 
The shareholders authorised the Board to issue 5.5 million of the newly created shares to shareholders who did not receive full allotment of shares applied for in the rights issue last year.

Funds realised through the share split and subsequent listing on the Main Investment Segment of the NSE will mainly go towards expanding to Malawi, Rwanda and Southern Sudan, where the firm plans to partner with the local co-operative movements rather than opening new subsidiaries.

The firm also declared a dividend of Sh1.60 per share to its shareholders after it posted a net profit growth of 106 percent from Sh246 million in 2009 to Sh512 million last year.

The profit surge was driven by an increase in the firm’s gross premium income which rose to Sh4.57 billion in 2010 from Sh2.77 billion the previous year. Shareholder equally passed a resolution to increase the company’s share capital from Sh1.2 billion to Sh3 billion by creating 90 million ordinary shares.

After sustained high annual growth rate of 25 percent in the last decade, CIC insurance Group is now focusing on maintaining its growth momentum growth through product innovation, use nonconventional distribution channels and accessible payment platforms aimed at the mass market and tapping the microinsurance niche. 

“We project to rake in Sh7.5 billion in 2011 by improving distribution and premium payment modes to suit the intermittent income of the lower market segment,” said Mr Nelson Kuria, the Managing Director CIC Insurance Group.  

Profit margins in the region, especially in the Kenyan insurance industry, have been thinning over the past several years, but that has not subdued the profitability of the rapidly growing firm.  

“Micro-insurance accounted for about Sh600 million of the gross premiums collected; there is still room for huge organic growth as Kenya’s insurance penetration is a paltry three percent of the population,” said Japheth Magomere, CIC Insurance Group Chairman.   
The company is targeting underwriting income of Sh10 billion by the end of 2013, which would make it one of the three biggest insurers in Kenya. “We expect our strategic partnerships and prudent investment decisions will help us achieve this goal,” said Mr Kuria.  
CIC Insurance Group has equally acquired a 32 percent stake in the only Takaful operator in Kenya, Takaful Insurance of Africa (TIA). Kenya\’s population is estimated at 39 million out of which over 10 percent is Muslim. The Group is positioning itself to this market as part of its growth strategy.

In October last year, Co-operative Bank of Kenya Ltd., the country’s fifth-biggest lender by market value, upped its stake in CIC Insurance Group to 21 percent. The Group plans to leverage this partnership to annex more market share through bancassurance. 

Last year the firm launched M-Bima, an insurance premium payment instrument that rides on mobile money transfer platforms such as M-Pesa in a bid to reach the mass market. Policy holders with the Group will now remit as little as Sh20 premium payment through their cell phones.

“This is one of the solutions to the challenges involved in penetrating the low-income market and developing cost efficient insurance distribution and payment mechanisms,” said Mr Kuria. 

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