Markets & Finance

Policyholders to own part of CIC in plan set for approval

cic

CIC Insurance plans to give members stake in the company through mutualisation. This will enable them to earn a dividend. Photo/File

A section of CIC Insurance policyholders are expected to own a piece of the underwriter through its co-operative society in a new plan set for approval this month.

The offer to the policyholders, called mutualisation, will give them a stake in Cooperative Insurance Society Ltd (CIS), the 75 per cent strategic owner of the listed CIC Insurance Group.

The strategic share is locked in for five years (up to 2018) under a listing agreement with Capital Markets Authority with the balance floated at the Nairobi Securities Exchange. The stake still gets share of the profit.

The move would see the profits earned shared with policyholders in form of dividends and reduced premiums. It is expected to hasten expansion of the company business, especially through co-operative societies.

Last year, the listed firm reported a Sh1.4 billion profit after tax putting the CIS share of the earning at about Sh1.05 billion.

Corporate affairs and communications manager Michael Mugo said that the insurer had entered into an agreement with International Cooperative and Mutual Insurance Federation and it expects the deal would boost CIC’s footprint in the country.

The federation is a global trade association representing more than 220 co-operative and mutual insurers from over 70 countries worldwide.

“We know this is a new concept in Kenya but we have done enough research and established it’s a potential, though unexploited area in the insurance industry,” Mr Mugo told the Business Daily.

Cooperative Insurance Society will now raise capital largely from its members making them the majority owners of the stock. Mr Mugo said the cooperative society would offer members mortgages through savings.

CIC Insurance comprises 1,550 cooperative societies and 6,177 individual owners. The company changed its shareholding structure ahead on its listing last year.

It was once known as Co-operative Insurance Services Limited (CIS) but later changed to the Co-operative Insurance Company of Kenya Limited in 1999.

The change of name was part of the company’s market repositioning for growth as it plans to expand to Uganda and Sudan with the societies expected to benefit from the move.

CIC is one of the most aggressive insurers, targeting the small and medium enterprises which account for most of the growth in business. One of the large owners of CIS is Co-operative Bank of Kenya with just above 40 per cent.

The insurer, which listed mid last year at Sh3.50, closed Thursday at Sh5.55 a share although it has previously touched a high of Sh7.