Kenyan cooperative insurer makes bold move in Uganda

CIC Insurance Group seeks Shs7.25billion in share offer to fund expansion

Regional insurance firm, CIC Africa Insurance holds just 0.01% of Uganda’s insurance business but it has signaled its determination to change that with plans offer shares to selected Ugandan cooperatives and Savings and Credit Cooperative Societies (SACCOS). The plan is to raise Shs7.25billion for expansion.

After a brief wait for approval by the Capital Markets Authority, the deal is now ready to be rolled out.

Zipporah Mungai, the managing director of CIC Africa Uganda Limited said the funds raised shall be used to strengthen its core capital and set up outlets in Fort Portal, Masaka and Lira.

“The proceeds from this offer shall be partly used to recapitalise the company’s subsidiaries with the remainder being used for market expansion and to increase of our capacity to make bigger investments which will then translate into higher returns,” she said.

The company is little know in Uganda and registered only Shs 62.38 million in gross underwritten premium in both life and general insurance in its first year of operation in the country in 2015, representing 0.01% of the industry’s Shs611.13 billion gross underwritten premium.

But it is the top micro and cooperative insurer in Kenya where it has been listed on the Nairobi Stock Exchange since 2012 and serves more than 1.2million clients. In 2015 CIC recorded a 4.4% growth in net profit to Kshs1. 136billion (Shs 38.56billion), helped by deferred tax which partly covered for a fall in income.

Apart from Uganda, the company has successfully used the same approach of offering shares to selected cooperatives to penetrate markets in South Sudan and Malawi, and even in Kenya.

In 2008 CIC sold 20 million shares to cooperative societies in Kenya raising more than Ksh234million (Shs 7.945billion), enhancing the company’s capacity to effectively operate its three subsidiaries and an associate company namely CIC Life Assurance, CIC General Insurance Ltd, CIC Asset Management Ltd and Takaful Insurance of Africa Ltd.

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 to 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.

Its partners in Uganda are the Uganda Cooperative Savings and Credit Union Ltd (UCSCUL) and the Uganda Cooperative Alliance Ltd (UCAL) who own 51% of the business.

 Cooperatives eager

Sylvester Ndiroramukama, the CEO of UCSCUL), told The Independent that they are eagerly awaiting the CIC share offer.

“The idea of us as Cooperative and Sacco’s buying shares in an insurance company is a blessing,” he said, “For many years we have been insuring our products with various insurance companies but did not give us an opportunity to own part of these companies.”

Ndiroramukama explained that under the CIC arrangement, Cooperatives and Saccos will not only take up policies for various services but also make an extra income in the event that the insurance company makes a profit.

He said the arrangement will also ensure that part of the premiums collected will remain in the country and thus contributing to the development of our nation unlike it has been with many insurance firms.

“As UCSCU, we already have shares in CIC Insurance and we are going to buy more now than an opportunity has come with the share offering,” he said.

Under the plan, CIC is offering 724,900 ordinary shares to a selected public priced at Shs10, 000 each. The company has appointed African Alliance as the transaction advisor and Stanbic Bank as the funds receiver.