CIC Insurance’s result in the first half of the year rose 45 per cent. on premium growth

Companies

CIC Insurance’s result in the first half of the year rose 45 per cent. on premium growth

Friday, August 5, 2022

CIC Insurance Group CEO Patrick Nyaga. PHOTO | POOL

CIC Insurance Group’s net profit rose 45 per cent to Sh376.4 million in the half year to June, driven by growth in premiums which offset a decline in investment income from shares.

Gross written premiums increased by Sh2.46 billion to Sh13.23 billion, which the firm attributed to the acquisition of a new business in its general insurance business and better pricing of life insurance products.

The listed insurer also benefited from subdued growth in claims, which rose 1.9 per cent to Sh5.92 billion.

Excess outflow

Insurers have tightened their claims scheme to reduce excess outflows to offset reduced income from investments such as property and shares, amid increased competition for premiums in a market that has limited penetration.

“The strong performance was driven by strong gross premium growth and improved underwriting performance due to the continued implementation of transformation initiatives,” said CIC CEO Patrick Nyaga.

“Our regional businesses continued on a growth trajectory, with gross premiums increasing by 20 per cent in Malawi, 43 per cent in Uganda and 143 per cent in South Sudan. The companies also continued to positively support the group’s bottom line.”

The biggest drain on the top line came from investment income, which fell by 18 per cent to Sh901 million due to falling valuations of shares in the stock market.

In the first half of this year, the Nairobi Securities Exchange (NSE) recorded a 26 percent drop in investor wealth, affected by global capital outflows from emerging and frontier markets to the US and other major economies, which raised interest rates to counter high inflation.

Among those suffering from the general decline in share prices were insurance companies, whose exposure to the market has increased in recent years as an alternative to property in their investment portfolio allocation.

Other segments performed well for CIC, with its fund management division recording a 29 per cent increase in fees to Sh541 million.

The insurer said the higher fees came from growth in funds under management at CIC Asset Management by a fifth to Sh106.7 billion.

The unit’s profit before tax therefore increased by 21.8 per cent to Sh274 million in the period.

Capital position

Going forward, the firm hopes to strengthen profitability by allocating capital to higher-earning assets and digitizing its service delivery channels, the CEO said.

“Reorganization of the balance sheet is underway to ensure optimal utilization of available resources, including disposal of non-core assets such as land to capitalize on business and investment in better yielding assets,” Mr Nyaga said.

CIC has sought to divest its 200-hectare land in Kiambu to raise at least Sh3.8 billion, earmarked for repaying its liabilities, improving its capital position and increasing cash flow.

The firm, which postponed the sale until after next week’s general election, divided the property into quarter-acre plots for easier sale after failing to dispose of it as one block.

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