CIC Insurance Group posted a Sh296.8 million net loss in the year ended December, breaking its 13-year profit-making run that goes back to 2007.
It also marks the first full-year loss to be reported by the company since it listed on the Nairobi Securities Exchange (NSE) by introduction on July 18, 2012.
The insurer’s loss in the review period came on the back of higher taxation and reduced premiums, reversing the net profit of Sh321.5 million recorded a year earlier.
Net earned premiums shrunk by Sh458 million to Sh13.9 billion. Insurers have struggled to grow premiums in the Covid-19 pandemic era that has caused economic disruption, including job losses and reduced corporate earnings.
CIC paid a larger tax bill of Sh217.2 million in the review period on a pre-tax loss of Sh79.5 million.
The income tax expense in the previous year was Sh63.9 million that was charged on a pre-tax profit of Sh385.5 million.
The underwriter did not comment on the reason for the increased taxation despite sliding into a loss.
The larger amount, however, could be due to deferred taxes which it decided to settle in the review period.
The firm did not declare a dividend, taking its cash payout drought to two years. The company last paid a dividend of Sh0.13 per share for the year ended December 2018.
The insurer reduced its operating and other expenses to Sh4.8 billion in the review period from Sh4.9 billion in 2019. Its fees and commission income grew to Sh1.4 billion from Sh1.2 billion, helping to mitigate the overall decline in total income which shrunk to Sh16.8 billion from Sh17.6 billion.
CIC says it is currently focused on better pricing of its insurance policies to reflect the assumed risks besides lifting the performance of its regional subsidiaries.The company has also announced plans to sell 712 acres of its freehold land in transactions expected to earn it substantial gains running into billions of shillings.The company has not revalued the land holdings on which it had initially planned to build residential properties.Part of the cash is expected to be used in reducing its borrowings, including repaying a Sh4.5 billion loan taken from its significant shareholder Co-operative Bank of Kenya in October 2019.Sale of the land holdings in Kajiado and Kiambu counties, if successful, will enable the insurer to strengthen its capital position. The insurer’s borrowings stood at Sh3.9 billion as of December 2020.
