CIC Insurance Group incurred Sh275.65 million on a voluntary exit and redundancy programme announced in October last year, as the insurer switched to a leaner structure powered by technology.
The group’s latest disclosures show that the firm, which targeted up to 75 jobs, spent Sh198.69 million severance pay on employees who opted to retire or exit and booked a further Sh76.96 million as pending payments.
CIC announced the redundancy when it had 728 employees at end of October last year but closed December of the same year with 793 employees, meaning that the insurer may have fully replaced all those who exited and hired even more in the period earnings hit a record Sh1.44 billion.
“Restructuring costs relate to severance pay for employees who opted to retire/exit under the voluntary early retirement/exit programme in the year,” said CIC in the latest annual report.
“Restructuring costs payable relate to severance pay for employees who opted to retire/exit under the voluntary early retirement/exit programme in the year, and their payments are due in the subsequent year.”
CIC Group Chief Executive Officer Patrick Nyaga had in October last year said the restructuring came after a detailed review that resulted in adoption of a “leaner, flatter and more transparent” structure.
He explained that the new structure aimed at optimising vital capabilities, eliminating functional and resources duplication, driving cost efficiencies and removing complexities relating to reporting lines.
The Sh199 million severance pay pushed up CIC’s staff costs to Sh2.69 billion from Sh2.27 billion spent in the previous year when it had 648 employees.
CIC mid this month proposed to maintain a Sh0.13 per share dividend amounting to Sh340 million after posting a record Sh1.44 billion net profit for the financial year ended December 2023.
The record profit was the first full year under new accounting rules dubbed International Financial Reporting Standards (IFRS) 17 that in January last year replaced IFRS 4 that had been in use for 18 years.
The new standard saw CIC restate its 2022 net profit to Sh157.14 million from an earlier reported figure of Sh1.09 billion. The restatement was to make last year’s performance comparable with that of 2022, under IFRS 17.
CIC plans to pay the proposed dividend on or about July 8, 2024 to shareholders on the group’s register at the close of business on June 4.
