Co-op Bank boss raises his stake in CIC Insurance

Co-operative Bank managing director Gideon Muriuki has raised his stake in CIC Insurance, cementing his position as the largest individual shareholder.

Filings with the Capital Markets Authority show Mr Muriuki invested more than Sh40 million in the past one year to raise his CIC stake to 4.68 per cent in February.

His ownership previously stood at 3.58 per cent in December 2012 and had remained unchanged since six months earlier, when CIC listed on the Nairobi Securities Exchange through introduction.

Mr Muriuki told the Business Daily on telephone that the share purchases reflect his confidence in the insurer’s prospects.

“I am bullish on CIC. The company has good fundamentals,” Mr Muriuki said.

“CIC has expanded its presence in the microinsurance business and I believe this is the segment that will drive insurance growth in the coming years.”

He added CIC is among insurers set to benefit from increased economic activities, including new infrastructure and mining projects.

Mr Muriuki’s purchase of CIC shares comes at a time when the insurer’s stock has gained to trade at Sh8.30 or more than double the price of Sh3.50 it listed at in July 2012.

This saw the insurer ranked as the best performing stock in the first quarter when it led with a price gain of 34.5 per cent, according to market data. The stock performance has seen Mr Muriuki’s stake rise to Sh846.6 million.

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The price rally has been linked to investor expectations of better earnings in the medium term.

CIC has embarked on an ambitious regional expansion to Malawi, Tanzania, South Sudan and Uganda to boost its earnings and diversify from the local market.

The insurer held its dividend pay-out for the year ended December flat at Sh0.10, but offered shareholders a bonus share issue of one for every five held.

Its net profit grew 1.4 per cent to Sh1.4 billion in the review period, held back by lower investment income and higher claims. Mr Muriuki’s accumulation of CIC shares comes after the insurer’s CEO Nelson Kuria reduced his ownership in the company in what he said was a restructuring of his portfolio.

The CEO sold one million shares, currently worth Sh8.3 million, between March and May last year, cutting his stake to 0.5 per cent currently worth Sh96.2 million.

CIC’s major owner, the Co-operative Insurance Society (CIS) Ltd, undertook not to sell any of its 1.6 billion shares for five years until August 2017.

Mr Muriuki’s increased investment in CIC underlines the close business links between the insurer and Co-operative Bank. Both firms are majority owned by thousands of co-operatives that form a large part of their customer base.

Co-op Holdings Co-operative Society has a 65 per cent stake in Co-op Bank and recently announced it would not dilute its ownership, citing the lender’s growth.

Mr Muriuki raised his stake in the bank to a record 2.09 per cent last year, firming his position as its largest individual owner with a stake currently worth Sh1.7 billion.