CIC Insurance first half profit up 45pc on premiums growth – Business Daily
CIC Insurance Group chief executive Patrick Nyaga. PHOTO | POOL
CIC Insurance Group’s net profit rose by 45 percent to Sh376.4 million in the half year to June, driven by growth in premiums, which offset a fall in investment income from equities.
The gross written premiums rose 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 underwriter also benefited from muted growth in claims, which went up by 1.9 percent to Sh5.92 billion.
Insurers have been tightening their claims sheet to cut excess outflows to counter reduced income from investments such as property and stocks, amid increased competition for premiums in a market that has limited penetration.
“The strong performance was driven by strong growth on the gross written premium and improved performance on the underwriting results owing to continued implementation of transformation initiatives,” said CIC chief executive Patrick Nyaga.
“Our regional businesses continued on a growth trajectory with gross written premium increasing by 20 percent in Malawi, 43 percent in Uganda, and 143 percent in South Sudan. The companies also continued to support the group’s bottom line favourably.”
The main drain on the top line came from investment income, which declined by 18 percent to Sh901 million due to falling valuations of equities in the stock market.
In the first half of this year, the Nairobi Securities Exchange (NSE) recorded a decline of 26 percent in investor wealth, buffeted by global capital outflows from emerging and frontier markets to the US and other large economies, which raised interest rates to counter high inflation.
Among those who suffered from the general decline in the stock prices were insurance firms, whose exposure to the market has gone up in recent years as an alternative to property in their investment portfolio distribution.
Other segments performed well for CIC, with its fund management arm recording a 29 percent jump in fees to Sh541 million.
The insurer said the higher fees drew from the growth in the funds under management at CIC Asset Management by a fifth to Sh106.7 billion.
The unit’s profit before tax, therefore, rose by 21.8 percent to Sh274 million in the period.
Going forward, the firm hopes to shore up profitability by allocating capital to higher earning assets and digitising its service delivery channels, the CEO said.
“Balance sheet reorganisation is on course to ensure optimal utilisation of the available resources, including disposal of non-core assets such as land for capitalisation on business and investment in better returning assets,” said Mr Nyaga.
CIC has been trying to dispose of its 200-acre land in Kiambu to raise at least Sh3.8 billion, earmarked for repayment of its liabilities, improving capital position, and boosting cash flows.
The firm, which postponed the sale until after next week’s General Election, subdivided the property into quarter-acre plots for easier sale after failing to dispose of it as one block.
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