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CIC Insurance sees better times ahead

Insurer’s losses more than triple to Shs 6.39bn in 2018

Kampala, Uganda | ISAAC KHISA | Cooperative Insurance Company Africa Uganda Ltd, commonly known as CIC insurance, recorded a sharp drop in profits last year but management assures its shareholders that everything is in control.

The company’s financial results for General and Life businesses shows that its net losses nearly tripled from Shs 2.33bn in 2017 to Shs 6.39bn in 2018 citing increased competition and price undercutting in the country’s insurance industry that now boasts of 32 insurers.

However, the company recorded a sharp increase in gross underwritten premiums from Shs 14.2bn to Shs 23.4bn during the period under review.

The premium ceded to reinsurers grew 93% to Shs5.8bn, with net premiums also increasing from Shs8.6bn to Shs16.5bn.

Tom Gitogo, CEO at the CIC Group revealed during the company’s Annual General Meeting in Kampala on April 26 that the high commission expense and the change in reporting to standards to IRFS9 also contributed to a drop in profit.

“We were extending our services to some companies at slightly lower prices as they test our services. At the same time, we have also been offering high incentives to our staff. However, going forward, we are no longer going to offer these incentives,” he said, adding that the company is expected to break-even this year.

Yasin Nnume, the chairperson of CIC Africa Uganda said they are reviewing market opportunities that have the capacity for growth, locally and in the region using established groups such as cooperatives and other aggregators like banks, churches and schools.

“We will consistently review our general and life business, analyzing account performance in view of retaining businesses bearing the potential of driving the company towards profitable growth,” he said.

He, however, decried the low interest of local cooperatives to buy shares in the company.

He said though the company offered 724,900 shares in 2015 to the local cooperatives to acquire a stake, they were undersubscribed.

“CIC Kenya still holds 90% of the shareholdings in CIC Africa Uganda Ltd yet they would like to own 51% and the rest owned by Ugandan cooperative societies,” he said.

He said opportunities still exist for local cooperative societies to acquire a stake in the company.

He said CIC Kenya Ltd has even offered to reduce its shareholdings further in the Ugandan subsidiary to local cooperatives similar to its operations back home.

Currently, 74% shareholdings in CIC Kenya Ltd is held by cooperative societies and the rest is listed on the Nairobi Stock Exchange.

Regional performance

In terms of Group performance, CIC Insurance recorded a 12% growth in gross underwritten premiums to Shs614bn.

The Group’s before tax profit grew 64% to Shs 31.5bn while asset base grew by 8% to 1.2trillion.

Out of the total premium recorded, CIC South Sudan saw its gross written premiums more than triple from Shs5bn in 2017 to Shs18bn in 2018.

CIC Malawi also recorded an increase in gross premiums from Shs4bn to Shs7bn during the same period under review.

CIC Africa Ltd started its regional expansion in 2014 to tap into the growing demand for insurance services.

In Uganda, it partnered with the Uganda Cooperative Savings and Credit Union Ltd (UCSCUL) and the Uganda Cooperative Alliance Ltd (UCAL), with a plan to own 51% stake.

In Malawi it partnered with the Malawi Union of Savings and Credit Cooperatives (MUSCCO) to form a cooperative insurance company co-owned on 50:50 basis.

In South Sudan, the regional underwriter linked with the Cooperative Bank Group operations, in which it is the majority shareholder with a 69 % stake while Co-operative Bank of South Sudan owns the remaining stake.

Going forward, Japheth Magomere, the chairperson CIC Group said the company plans to invest in technological systems that provide efficiency and value to customers.

“The e-Oxygen for instance is a system that has contributed to the growth of medical business. As a result of this success, we are launching medical insurance business here in Uganda,” he said.

He said the company is looking forward to building strategic partnerships with like-minded organizations to break into new and existing markets as well as provide learning opportunity in their operations.

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