Kenyan insurer CIC Insurance Group Plc. has put up a multimillion dollar property for sale to strengthen earnings that have been adversely affected by growing claims in some key lines of business. The property comprises a 200-acre parcel of land that is part of Manira Estate in Kiambu County. The insurer which is listed on the Nairobi Securities Exchange is seeking to supplement the income from its underwriting business through the returns from the various investment portfolios.

These include two commercial buildings in Nairobi’s Upper Hill which generate rental income and parcels of land, which continue to appreciate and offer competitive returns.

The group, which has operations in Kenya, Uganda, South Sudan and Malawi, seeks to raise more than Ksh8.82 billion ($88.2 million) from the transaction that is still subject to regulatory and shareholder approvals.

The approval for change of use from agricultural to mixed use/commercial for the Kiambu property was granted in 2018.

Meetings ban

Acting chief executive Elijah Wachira told The EastAfrican that a buyer has been identified and completion of the transaction only awaits approvals from the shareholders and the Capital Markets Authority.

The transaction is, however, expected to be delayed by the Covid-19 pandemic that has seen the government ban all public gatherings including company annual general meetings.

“We will seek ratification of the sale in the next AGM as the restrictions on public gatherings are eased,” said Gail Odongo, the Company Secretary.

The group’s net profit for 2019 dropped by 33 per cent to Ksh321.59 million ($3.21 million) from Ksh480.94 million ($4.8 million) in 2018 largely due to growth in claims, a drop in investment due to the poor performance of the equities market, coupled with a slump in revaluation gains on property investments.

Last year the firm issued a profit warning that net earnings for the year would plunge by more than 25 per cent due to a surge in claims.

Debt write-off

The firm’s audited financial statements for 2019 show gross written premiums increased by seven per cent to Ksh17.7 billion ($177 million) from 16.6 billion ($166 million) in the same period in 2018 while claims expenses rose by six per cent to Ksh10.04 billion ($100.4 million) from Ksh9.45 billion ($94.5 million).

According to CIC management the firm continues to experience adverse claims in some key lines of business that significantly impacted overall group profitability.

The insurer wrote off Ksh59.8 million ($598,000) it had invested in short-term debt issued by collapsed retail chain Nakumatt Holdings. CIC Insurance had invested more than Ksh70 million ($700,000) in Nakumatt’s commercial paper.