CIC expands into Uganda, Malawi with joint ventures

A CIC Insurance customer care official serves a client in Nairobi. The company is eyeing the regional market through  joint partnerships in Uganda and Malawi. PHOTO | FILE
A CIC Insurance customer care official serves a client in Nairobi. The company is eyeing the regional market through joint partnerships in Uganda and Malawi. PHOTO | FILE 

CIC Group has established footholds in Uganda and Malawi by cobbling together joint ventures with established cooperative movement players.

In Uganda, the listed underwriter has partnered with two saccos to form a jointly-owned insurance company.

The regional expansion has also seen CIC open subsidiaries in Malawi and South Sudan.

“We have partnered with Uganda Cooperative Savings and Credit Union Ltd and Uganda Cooperative Alliance Ltd,” CIC chief executive (designate) Tom Gitogo told the Business Daily.

CIC has at the same time concluded a management deal with Malawi Union of Savings and Credit Cooperatives (MUSCCO) to form a cooperative insurance company that would be co-owned on 50:50 basis, targeting the saccos’ members.

“The new insurance unit is expected to target 120,000 savings and credit cooperatives members, all of whom are affiliated to MUSCCO,” reported Exotix, a London-based brokerage house.

The Exotix report, based on management meetings, said CIC is wrapping up the partnership in Uganda that would have an ownership structure similar to the Malawian subsidiary.

In South Sudan, the Kenyan underwriter linked to the Cooperative Bank Group operates through CIC Africa Insurance, in which it is the majority shareholder with a 69 per cent stake, while Co-operative Bank of South Sudan owns the remaining 31 per cent.

The company did not indicate how much it is investing in its regional subsidiaries but the information memorandum for Sh5 billion bond offer said CIC planned to use Sh1.3 billion or 26 per cent of proceeds to expand to the three markets.

Another Sh1.2 billion (24 per cent) would go into recapitalisation of its subsidiaries.

Real estate was to take Sh1.7 billion with the remaining Sh800 million to go into construction of a medical facility.

The CIC bond, on sale in the last quarter of 2014, managed to attract bids worth Sh6.34 billion against the Sh5 billion sought.

The Exotix report adds CIC is targeting Kenyans at the low end of the market estimated at eight million.

CIC joined Britam which in June 2014 went to the bond market to borrow for regional, local expansion, investment in real estate and other corporate ventures.

The Exotix report said Britam was to use 10 per cent or Sh600 million to expand both locally and regionally.

“Britam shall have a presence in a total of seven countries namely Kenya, Uganda, Tanzania, Rwanda, South Sudan, Malawi and Mozambique,” says the information memorandum on Britam’s bond offer.

“Britam intends to consolidate its presence in these seven countries to maximise shareholder returns.”

Foreign companies have also been expanding into the Kenya insurance space.

UK-based Old Mutual recently increased its ownership in UAP Group to 60.66 per cent.

Swiss Re entered Kenya after it bought a 26.9 per cent stake in the privately-owned Apollo Investments for an undisclosed amount in October last year.

A month earlier, Prudential Insurance of the UK said part of its Sh1.5 billion investment in Kenya had been allocated to buying of Shield Assurance.