Co-op Bank #ticker:COOP has reduced its indirect ownership in CIC Insurance to 24.8 percent after selling shares to a group of saccos for a total of Sh106.6 million.
The lender has been a long-term investor in CIC through the investment holding company Co-op Insurance Society Limited which has a 74.3 percent stake in the insurer.
Co-op Bank says in its latest annual report that its ownership in the holding company dropped to 33.41 percent in the year ended December 2019 compared to 35.71 percent a year earlier.
This resulted in the bank’s effective ownership in the insurer also declining from the previous 26.5 percent to the current 24.8 percent that has a market value of Sh1.4 billion.
The lender says it received Sh106.6 million from the multiple transactions that saw it sell a total of 44.7 million shares in the investment vehicle.
“The bank has 33.41 percent interest in Co-operative Insurance Society Limited which is the majority shareholder of CIC Insurance Group Limited,” the lender says in the report.
“This is a reduction from the 35.71 percent interest held in prior year following the sale of 44.7 million shares in two tranches of 30.4 million and 14.3 million respectively during the year (ended December 2019).”
Co-op Bank’s chief executive Gideon Muriuki told the Business Daily that the shares were sold to several saccos, adding that the transaction is part of the “ongoing strategic transformation agenda at CIC Insurance.”
While individuals are barred from owning more than 25 percent of an insurer, banks and insurance companies are exempt from this limit.
Harambee was one of the saccos that bought the shares from Co-op Bank, acquiring 21.1 million units in a move that raised its ownership in the investment vehicle to 2.9 percent from the previous 1.81 percent.
K-Unity and Kenya Police saccos bought five million shares each, boosting their stakes to 3.5 percent and 1.48 percent respectively.
Nawiri sacco acquired 4.3 million shares, raising its interest to 2.08 percent.
Co-op Bank has been leading efforts to boost the fortunes of CIC Insurance. The bank’s former finance and strategy director Patrick Nyaga was appointed the CEO of the insurer last month, replacing Mr Elijah Wachira who was holding the position in an acting capacity.
Mr Wachira had assumed the role after former CEO Tom Gitogo cut his contract short in October 2019 for unexplained reasons.
The insurer’s market capitalisation had dropped 68 percent from Sh25.1 billion in December 2014 to Sh8 billion by the time Mr Gitogo exited.
The bank also lent CIC Sh4.5 billion to help it repay its Sh5 billion corporate bond on October 2, 2019.
CIC had initially planned to settle the bond using proceeds from sale of its 712 acres of freehold land that delayed, prompting it to take the loan from Co-op Bank.