Listing costs weigh on CIC’s half-year performance

• The insurer, whose shares were listed through the relatively cheaper introduction method, reported a profit after tax of Sh415 million for the six months to June compared to Sh469 million reported last year.
• CIC Insurance booked a cost of Sh112 million which it attributed to the listing exercise and the regulatory separation of its life business from the general insurance, which it implemented in January.
• CIC Group operates CIC Life, CIC General and CIC Asset Management under the demerged structure. The company said that it engaged consultants in the areas such as information technology and business strategy to help in separation of the units.
• CIC investment income grew by 75 per cent to stand at Sh471 million with management attributing it to rise in interest rates which saw bank deposits and government securities yield more.

CIC Insurance has reported an 11.5 per cent drop in its first half-year performance bogged down by a one-off expense related to its listing on the Nairobi Securities Exchange in July.

The insurer, whose shares were listed through the relatively cheaper introduction method, reported a profit after tax of Sh415 million for the six months to June compared to Sh469 million reported last year.

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CIC Insurance booked a cost of Sh112 million which it attributed to the listing exercise and the regulatory separation of its life business from the general insurance, which it implemented in January.

“Exceptional items relate to expenses incurred with respect to the demerger which was actualised in January and expenses towards listing the group,” said the company in a statement.

“The board expects positive results in the second half in view of the fact that the exceptional costs were a one-off expenditure.”

As per the company’s listing memorandum, CIC paid out listing fees of Sh21.4 million which included payments to regulatory authorities, brokerage and advisory commissions, advertising, printing cost and consultant fees.

This implies that the insurer spent approximately Sh90 million in the demerging exercise.

The separation of life and general business was a policy of the Insurance Regulatory Authority (IRA) on all insurance companies meant to secure contributions of life insurance policy holders.

Some of the costs included stamp duty of Sh25.3 million for increase in capital in the subsidiaries to Sh1 billion and a further Sh16.4 million for transfer of shares from the group, said the company’s general manager for finance Joel Gatune.

CIC Group operates CIC Life, CIC General and CIC Asset Management under the demerged structure. The company said that it engaged consultants in the areas such as information technology and business strategy to help in separation of the units.

“The board expects positive results in the second half of the year in view of the relatively stable macroeconomic environment and the fact that the exceptional costs in relation to demerger listing were a one-off expenditure,” said the company.

CIC investment income grew by 75 per cent to stand at Sh471 million with management attributing it to rise in interest rates which saw bank deposits and government securities yield more.

Gross premiums

The gross written premiums increased to Sh4 billion from Sh3.1 billion in 2011 underlining a growth in the company’s core business.